Healthcare

Our Declaration of Independence so eloquently stated that we have the inalienable rights to life, liberty, and the pursuit of happiness. One of the most important jobs of government is to protect the lives of its citizens. Eight of the top 10 killers of Americans in 2015 were health-related. They include #1 heart disease (633,842), #2 cancer (595,930), #3 chronic lower respiratory diseases (155,041), #5 Stroke (140,323), #6 Alzheimer’s disease (110,561), #7 diabetes (79,535), #8 influenza and pneumonia (57,062), #9 nephritis, nephrotic syndrome, and nephrosis, aka kidney disease (44,193). These 8 causes of death accounted for over 64% of American deaths in 2015.[1] If disease is the top killer of Americans, and it is the government’s job to protect Americans, and we have the inalienable right to life, then is it not the government’s responsibility to ensure that everyone has access to life-saving and preventative care?

That being said, Obamacare has failed to make healthcare affordable so that all Americans have the access they need. Premiums and deductibles were skyrocketing before Obamacare, and continued to rise under Obamacare, likely only slowed due to the recession. Obamacare, much like the quickly-drafted plans to replace it, focuses on the insurance, but ignores what is driving the cost in the first place, the high cost of medical care in the United States.

An analysis of healthcare expenditures in 1958 and in 2012 shows that in terms of hours worked in order to be able to afford it, the cost of healthcare had quadrupled.[2] In the United States, we spend about 2.5 times more per capita on healthcare than the average country belonging to The Organization for Economic Cooperation and Development (OECD), and 1/3 more per capita than the next biggest healthcare spender, despite going to the doctor nearly 40% less.[3]

Despite these high costs, our medical care doesn’t appear to be better than in other developed countries. Although we have good cancer survival rates, we have a lower life expectancy, which recently declined for the first time in decades, we have the highest infant mortality rate of OECD countries, and a much higher prevalence of chronic conditions.[4]

A 2009 study by the National Academies of Practice found $765 billion in excessive costs in the US healthcare system. These costs were incurred by unnecessary services or unnecessary choice of higher-cost services or providers, inefficiencies, insurance administrative inefficiencies and documentation, fraud, prices that were simply unexplainably high, and missed prevention opportunities.[5] These extra costs need to be cut if we want to get off our current, unsustainable course.

There is an enormous discrepancy among costs for procedures depending on location and insurance. A knee replacement in Sacramento, CA costs on average $57,504 in Sacramento, but only $30,261 on average in Riverside, CA. If you need a pregnancy ultrasound in Cleveland, OH, it will cost $522, but you will pay just over a third of that if you drive 60 miles to Canon.[6] Hospitals charge different prices depending on whether the patient is insured, who the patient’s insurer is, and even which plan the patient has with that insurer.[7] All of the different prices for the same care creates an administrative nightmare that contributes to the excessive costs mentioned above. For this reason, pricing needs to be standardized, and presented up front, regardless of insurance. To achieve this, I support an all-payer system that allows insurance providers to jointly negotiate prices. This will increase the bargaining power of insurance companies to obtain lower prices from healthcare providers, as well as standardize costs of medical procedures.

Tens of billions are spent on unnecessary procedures and tests to protect against liability, and on malpractice insurance and lawsuits. To help reduce these costs, we need to cap non-economic awards in these cases. This will reduce malpractice insurance costs and reduce incentive to run unnecessary procedures and tests. Wisconsin already does this, but other states need to follow.

My proposal attempts to maximize health coverage while reducing and balancing the $354.7 billion currently being funded by general tax revenues ($245.7 billion for Medicare, $42.6 billion for Obamacare marketplace subsidies, $63.5 billion for VA healthcare, and $11.9 billion for hospital reimbursement for providing charity care to the uninsured, not to mention the costs to state governments for these).[8] This proposal will not only repeal and replace Obamacare, along with its billion-dollar subsidies, but also combine VA healthcare, Medicare, and Medicaid into a system available to all, but with the option to opt for private insurance, whether offered through an employer or purchased individually. The exception would be elected and appointed federal officials, who would be required to stay on the public system. If we want to cover all Americans, and be able to afford to do so, we need to stop thinking of universal healthcare as a government entitlement, and start thinking of it as a health insurance plan.

Unlike Medicare, which is funded largely through general tax revenues, a 2.9% payroll tax that every worker has to pay, and premiums for higher-income enrollees, this plan will be funded by, besides managing the cost of care to make it more affordable, a flat payroll tax only on those who remain in the public system to be shared between the employee and the employer. This replaces premiums and eliminates the 2.9% Medicare payroll tax that everyone, including those not on Medicare, currently pay. Rather than an annual deductible, I would recommend a co-pay of a certain percentage (15% for example) or a certain value ($250 for example), whichever is less, for each bill up to a maximum annual out-of-pocket amount ($1,000 for example). This creates a small burden on the patient so that he or she does not lose consciousness of cost after the deductible has been expended. It also reduces hesitancy to seek medical care before the deductible has been expended.

To prevent people joining at retirement from taking advantage of a system they weren’t paying into, for those who wish to join the public system in retirement, there will be a deadline to join the program of 10 years prior to the full retirement age, otherwise they will have to pay the full flat tax out of their Social Security pensions. However, regular checkups may qualify for a lower rate, as preventative checkups and care will reduce the risk of high-cost treatments needed later.

The average Obamacare premium in Wisconsin in 2017 is $514 per month.[9] Under this plan, at a flat tax rate of 20%, 10% paid by the employee, 10% paid by the employer, a person earning Wisconsin’s median wage of $49,000 would pay $408 per month and be able to take advantage of the plan immediately, rather than having to spend $3,000 before seeing any benefits from the insurance. That figure comes from an estimate of an average annual income of $40,000, since the average for those enrolled in the public system will likely be somewhat lower than the average population, generating enough money to cover current per capita costs of Medicare and Medicaid combined.[10]

 


 

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