The Republican Party now is moving away from repealing Obamacare and is discussing “reform.” Besides being one more step on the road to GOP irrelevancy and displaying feckless disregard for the will of conservative voters, it is impossible to reform a system predicated on theft and false economics. I will leave the legal wrangling to people with nothing better to do. But here is the practical way to get us out of the medical mess we are in. Keep in mind that Obamacare is just Medicare on steroids, so the entire government morass, with over 160,000 pages of regulations, must go. And the result will be better and cheaper medical care.
The first thing, is to understand what real insurance is. Real insurance (think your house or car) is owned by the individual. It is therefore portable. It is purchased early in life when you are healthy, and the insurance is therefore affordable. It is for catastrophic illnesses only – not for every little sniffle or outpatient test. By paying cash for outpatient tests and doctors visits, and by removing outpatient care from the nightmarish Medicare regulations, fees for services will drop to free-market, competitive levels. And, by paying premiums throughout your life, your insurance company in a truly competitive market – not in a government monopoly market – will offer affordable rates for seniors by investing premiums over their lifetime. Actuaries, not government toadies, will determine rates.
So the four steps to unwinding the medical mess is as follows:
1. Eliminate all government regulation on the sale of health insurance. Do not mandate coverage; do not limit sale across state borders. Sell to people of any age, and reward people who are responsible and in good health with lower premiums. It is time for the GOP to actually do more than spout words of limited government and individual freedom.
2. Set a time for the phasing out employer-based health insurance. Like dealing with any bad business plan or bad debt, there is no pain-free solution to come out of the problem. Your employer doesn’t own your car insurance, and he should not own your health insurance. Personalized insurance you can tailor to your needs can be 50 percent cheaper than what you are having deducted from your paycheck. Everyone will shriek, “How can that possibly work?” The answer is that a real free market manages to price things so people can afford them. Governments make everything artificially more expensive.
Before Obamacare a young healthy person could get individual health insurance for $60-70 a month. An employer might pay $200-300 for the same person’s coverage. By linking health insurance to employment we have created a large group of people in their 50s who cannot quit their jobs without losing their health insurance and because of their age would become uninsurable. These people must be transitioned to either private insurance or to a Medicare type product, whichever they choose.
3. For anyone at or near Medicare age, say 50, or for those with uninsurable illnesses, who have no private insurance, the government will need to maintain the Medicare system till they are deceased. Like dealing with a bankruptcy, we must acknowledge debts that simply must be absorbed. But Medicare must be phased out by letting younger people buy lifetime health insurance unencumbered by government regulations. The Medicare Plantation will go away in favor of top-quality, free-market medicine – which was working well for the elderly until Medicare was forcibly imposed on them.
4. Medicaid – state-run “charity” care – must be replaced by personal health responsibility, individual liberty to buy whatever type of medical care a person wishes and local, personal charity. Medicaid costs my state about $40,000 a year per enrollee. And the worst part is it offers terrible access to sometimes bad quality care. Ultimately, we must make people responsible for their own health.
In today’s world where Medicaid patients have full coverage for “emergencies” but not much else, they tend to overuse emergency services at a very high price. I’ve had patients take an ambulance simply because they did not want to pay for or could not afford a taxi. And they paid zero for that ambulance ride. And in my farmer grandfather’s day, to break a leg might mean starvation – he would not have taken up extreme motocross or other risky health behaviors.
Now, to unwind this degrading and unworkable system, and to save money immediately, let’s give every Medicaid patient a $5,000 Health Savings Account, which grows tax-free and can be used for all health-related expenses. Additionally, government would pay about $4,000 for catastrophic health insurance coverage that only pays for big-ticket items. Let the patients prioritize the use of their savings account for smaller medical bills. At the end of five years, stop funding Medicaid at all and let former recipients use these tax-deferred HSA funds to buy private insurance – understanding that they will not be allowed “free health care.” They will be held responsible for their medical bills.
At the same time, deregulating the system will make those bills affordable again. Remember that before 1964 and the government takeover of the health care in America, a blue-collar worker could afford to pay cash for an appendectomy or other common surgical procedure – and it didn’t break his bank. Chris Conover, writing in Forbes, points out that in 1958 a worker earning the average labor wage would be able to pay for his year’s health expenses by working 15 days. Today, without considering the added weight of taxation, an average worker would have to work 1,108 hours, or 138 days, from Jan.1 to May 8, to cover his or her routine medical expenses. My friend – who was a Mexican lemon picker before becoming a naturalized citizen and medical doctor – told me that seasonal Mexican workers could afford to pay cash for the medical care they needed in the U.S. during the months they were working here. But no more.
Keep in mind that the federal government has no enumerated power to involve itself in health care at all. Medicare, Obamacare and Medicaid are all equally unconstitutional. And remember that every government-run health-care system has failed, or is failing of its own ponderous bureaucracy. It is time not to “Repeal and Replace,” not to “Reform,” but to “Repeal.” Sadly, no nation – in the absence of total social and political collapse, like Germany or the USSR – has ever unwound government health care. But we surprised the world by electing Donald Trump. Let the U.S. be the leader in free-market health-care reform and we will not only “Make America Great Again”; we will “Make Medicine Great Again.”