Tuesday, March 27, 2012

Grants v. Insurance

The Medical Savings and Loan supplements savings with grants rather than high deductible insurance as is common with current HSA/HDHC policies.

The program is built on the premise that those who can self-fund their care should self-fund their care. The program uses a structured savings program to help people self-fund their care up to a reasonable percent of their life time income (by income I mean income plus what you currently pay for insurance.) If you make $40,000 a year and your employer pays $12,000 for your insurance, you are actually making $52,000 a year.

Let's say your life time income was $1.5 million. It would be reasonable to expect that you self-fund care up to $300,000 or so. If your income was $2 million, it might reasonable to expect you to fund up to $400k. A person who makes $50k a year will make $2,000,000.00 in their life.

Of course, sometimes people have medical expenses that exceed what they can reasonably self fund.

The MS&L supplements self-funding with grants.

Grants differ from insurance in the form of the contract.

Both insurance and grants start by calculating expected expenses. Lets say you were looking at a set of expenses that cost $1B (with a margin of error). With insurance, a third party will take on the expense as a liability. This third party will charge a premium that justifies taking on the risk associated with the liability (the margin of error). To insure a $1B expense, the third party might charge $1.1B or more.

With insurance every transaction is legal claim against this third party. When you visit a doctor, you and your doctor file a legal claim against the insurance company. This claim must be prepared in accordance with the standards of the courts that have jurisdiction over the legal claim. Medical billing is so expensive because every bill must be prepared to current legal standards.

With the grant process, people look at the same $1B cost. Rather than involving courts and a third party speculator, people simply hold aside the $1B in a foundation. The foundation has a legal obligation to dispense the funds to the participants in a plan.

Both the foundation and insurance distribute roughly the same amount of cash.

So, the Medical Savings and Loan holds up the ideal that those who can self-fund their care should self-fund their care. Participants in the plan have a savings accounts and access to loans. To help make health care decisions, participants in the plan have access to a Health Care Advocate.

Most people can self fund their care. If you have unusually high health expenses (or unusually low income) your experience will be as follows: You would borrow money for immediate expenses. The doctor would calculate what you need for future care. Your advocate would then apply for grants from the well-funded grant agencies.

The grant agencies would give you money that goes into your savings account. You and your advocate would then negotiate with your provider for service with these funds. If this money plus your personal funds continue to be insufficient, or you have new major expenses, the advocate will apply for more grants.

NOTE: Every payment in the Medical Savings and Loan is a direct cash transaction between the patient and doctor. There is no complex legal claim that requires state regulation.

This grant process disperses the same amount of money as insurance, but it removes the complex claims process.

So the program starts with each person having a large amount of money for their personal health care. By large, I mean your average American will have several hundred thousand dollars.

Most people can pay for their care from these large savings accounts.
When someone has insufficient funds, their health care advocate will apply for grants from well funded grant agencies. They will get a cash grant that they then can spend.

Most people can self fund their health care. For most people their medical experience will be one in which they save money during their productive years for use in times of need.

For those with extraordinary health expenses, they would proceed as if they were self-funding care. On occasion, they would receive a supplemental grant.

Since all the transactions are direct cash for service transactions, the program will be more efficient than either insurance or socialized medicine.

Since people do better with their money than with other people's money, people are apt to receive more and better care with their health care resources than in third party payment systems.

1 comment:

  1. We are familiar about the various kind of insurance plan in financial business. There are many company which is deduct the premium from employee saving grant. It's really good to manage out health expensive.

    Public Adjuster