Wednesday, March 28, 2012

Replacing Insurance with Grants

Currently, the United States funds healthcare through employer based insurance.

The goal of the Medical Savings and Loan is to revive the concept of self-ownership. It replaces employer based insurance with a structured-savings program supplemented with grants.

The mantra of the program is: Those who can self fund their care should self fund their care. says the US is currently spending somewhere between 17.3% and 19% of the GDP on health care. The MS&L would say that people should self-fund their care up to 15% of their income.

By income, I mean income plus insurance. A person with a $40,000 job and $10,000 in insurance is really making $50,000 a year, n-est-ce-pas? A person making $50,000 a year earns $2,000,000 in a 40 year career; So, it is reasonable to expect this person to self fund care up to $300,000.00.

The MS&L replaces insurance with a structured savings program and says that the employees are now responsible for their care.

Of course, some people have extraordinary expenses.

For these people, the MS&L sets aside a sizeable amount of money into foundations for grants. The program determines the amount of money needed for grants by doing an actuarial analysis of medical expenses that exceed the 15% of a worker's income.

To recap: The MS&L has the same amout of money as insurnace. It puts most of the money that currently goes to insurance into a structured savings program owned by the employee. It places a big chunk of money into a grants program.

@ComfyPaws asked why would employers want to replace insurance with grants?

Well, the reason they would want to do this is the employees would perceive this new system as a raise (they are getting a lot more money). Above all, replacing insurance with grants relieves the employer from a contractual obligation for the health care for their employees.

The amount of money the employer pays is still the same. The big difference is that the MS&L removes a contractual obligation.
Since the employees are now spending their own dollars on health care, the actual cost of health care is likey to go down (people are more careful with their money than they are with other people's money). The employer would be getting more and better care for the same cost.

NOTE: Not all employers would want to replace insurance with the Medical Savings and Loan. The program IS NOT totalitarian. The goal is to create an option to insurance. The goal of this program is to break the claim that insurance is the only way to fund health care. Even if only a few doze employers opt for the Medical Savings a Loan instead of insurance, it would prove that that are viable alternatives to insurance.

For example, an employer with a high turnover might prefer the MS&L, while one with a model of long term employer loyalty would prefer insurance.

(If anyone would like to host a meeting on the Medical Savings and Loan as an alternative to Employer Based insurance, please contact me.)

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