Thursday, April 26, 2012

Skin the the Game

Our current economic system is organized around the idea that there is a small professional class of owners, with the rest of the population langushing as just workers who live on a pay-go basis.

Re-introducing the concept of self-funded health care creates a system in which people must build substantial equity to assure they have adequate resources to pay for their care.

If we replaced insurance with the Medical Savings and Loan, more people would feel that they had skin the game and would work hard to help preserve the American system of property rights.

If your organization is learning more about the Medical Savings and Loan, I have a presentation that is begging an audience. Please contact me on my Contact Page.

Wednesday, April 25, 2012

What To Do With All That Money?

The idea behind the Medical Savings and Loan is that people should be directly responsible for the first portion of their health care of their family.

The first step is to figure out what is reasonable and what is not reasonable. What the program does is look at people current experience. If we look at current experience, we might find that 75% of of the people spend 15% or less of their life time income on health care, and that 90% of the people spend under 20% of their income on health care.

The Medical Savings and Loan would boldly declare that people are directly responsible for their care up to the first 20% of their income.
NOTE: By income, I mean your salary plus current health insurance. Lets say your salary was $40,000 and you current isurance was $10,000. Then your income is $50,000. A person with a $50,000 job would make $2,000,000 in a forty year career. 15% of that is $300,000. 20% of $2M is $400,000. This is a lot of money!

This person is paying $400,000 in insurance already. Essentially, they get to keep their insurance money.

Anyway, the Medical Savings and Loan might look at a person's income and boldly declare that this person is responsible for up to $300,000 in life time care, and put the person in a structured savings program to save for this care.

As you can see, members in the Medical Savings and Loan will end up with hundreds of thousands of dollars in savings for retirement and health care.

What are they to do with all of this money?

Well. This is the fun part!

People will have a great deal of control over this money.

The deal is that the funds must be put in things that hold value and can be converted to cash in times of need.

People would be encouraged to diversify; so the money is likely to go into a variety of investments.

The first part of the money would be in a savings account. Once you have a few thousand dollars in savings, you will want to diversify. So. some of the money would go into stocks and businesses. Some of the money might go into physical goods that hold value.

My grandparents had a set of furniture that they bought from a local doctor. The furniture was given to the doctor for services by a local furniture maker. So, there is absolutely nothing wrong with having health savings in the form of physical goods such as antiques, art or other goods that can be converted to cash.

Likewise a good portion of one's health savings would go into real estate.

The economic collapse of 2008 revealed that a large percent of the American people had little equity built up in their homes. A home is the natural vehicle for long term health savings. The economic crash would not have been as severe if people owned a greater portion of their homes.

Part of your health savings might go to paying down the mortgage. Better yet, your health savings account might buy a lien against your house.

So, lets say someone had $100,000 in health savings. You might have a quarter of the money in a savings account. A quarter in stocks or bonds, a quarter in physical goods that hold value such as antiques and a quarter of it put against the mortgage.

The system is taking the money that currently disappears into the hole of insurance and using it to turn regular people into owners.
With insurance, you take all of your health care money and put it in a pool which is controlled by the insurance company that owns the pool.

With the Medical Savings and Loan, you keep their health savings and are directly engaged in figuring out how to preserve or increase the value of the savings.

Essentially, converting from insurance to the Medical Savings and Loan would help restore the concept of ownership.

To repeat: the Medical Savings and Loan would tell people that they are responsible for the first 15% to 20% of their health care. They would be expected to put this money in things that hold or increase in value.

The insurance paradigm tells people that they are nothing but workers who toil away at a job and consume.

The Medical Savings and Loan tells people that they are owners and directly engages people in the game of figuring out how to preserve and create wealth.

Insurance is a relatively new invention. It really didn't take hold until the 1960s and 70s.

I contend that the concentration of wealth that we currently see is a direct result of the insurance paradigm.

The secret to making the Medical Savings and Loan work is a new position called the Health Care Advocate.  The first job of this advocate is to educate people about expected health expenses. The advocate will have a computer program that shows people will have large health expenses when they age.

The advocate will tell clients that they are expected to pay for their care up to 15% to 20% of their income, and would develop a savings plan to help save this money.

Yes, the first part of the money will into a savings account. As a person builds savings, the money will then be diversified with some money going into ownership of business, the home or into tangible goods like antiques.

With insurance, we are currently taking the same amount of money from people. It disappears into the coffers of the insurance company. The history of insurance is that workers diminish while the small group of insiders who control the pool become filthy rich.

The Medical Savings and Loan returns us to a more organic ownership paradigm in which the people as a whole thrive.
PLEASE CONTACT ME: The Medical Savings and Loan will replace insurance with personal savings. This program creates a new position called the Health Care Advocate. Each person in the plan will have a few hundred thousand dollars in savings to invest. If a group of people switched from insruance to direct savings, the group would have hundreds of millions of dolars to invest.

If a group of business people wanted to take a chance at exploring this concept, it is highly likely that first people who work on defining this program will end up making a great deal of money.

If a patriot who wanted to save America from socialized medicine hosted a conference on the Medical Savings and Loan, that person is likely to become a millionaire.

All that is needed is a group of patriots who want to restore the concept of ownership. If a group of people who wanted to stop socialized medicine contacted me, the people would have a fun presentation and just might be in a position to start a business that made them wealthy. I am in Utah and am willing to travel, but only if someone gives me a compelling reason to borrow money to pay for the trip.

Monday, April 23, 2012

On Consolidation of Power

Insurance concentrates wealth and power.

When you take everyone's health care resources and put it in a pool, then the the owners of the pool get extremely wealthy, while the rest diminish.

The solution is to break apart the pools.

The Medical Savings and Loan is a formula for breaking apart the pools, while providing the same level of health care.

If we broke apart the pools we would start breaking up the concentration of wealth and power that is bringing our nation down.

The first step to this process is for a small number of extremely brave people to discuss free market health care.

I have a great program just begging an audience of patriots.

Challenge: I live in Utah. Utah is controlled by the Romney Camp of Republicans. The Romney camp seeks to socialize health care via exchanges at the State Level.

The opposition in Utah is the Harry Reid Camp of Democrats. The Harry Reid Camp of Democrats seek to socialize medicine via exchanges at the National Level.

My only hope is to travel outside of Utah. I spent all of my money last year traveling to Reno, Las Vegas, Phoenix and Denver.

Both the Republican Establishment and Democratic Party want socialized medicine. Patriots could turn the debate around. Turning the debate around is a scary matter of talking alternatives to insurance.

My plan involves starting new businesses. Starting the businesses I have in mind would cost very little and it is likely that some of the people who use the business model would become wealthy.

If there was a group of patriots in the United States that was brave enough to contemplate alternatives to insurance, I would be happy to travel to their location figuring that I would be able to make enough money to pay for the trip.

I should mention, Utah is one of the most beautiful areas on the planet. If a person wanted to travel to Utah, I would be more than happy to take them to some of the scenic wonders near Moab.

A small group of private citizens could turn the health care debate around if they were brave enough to spend a day or two talking about self-funded health care as an alternative to insurance.

NOTE: I've had one offer to go to San Diego. If I could find a second person between Salt Lake and San Diego who is willing to talk about free market health care reform, I would head to San Diego.

Until I find a group willing to talk about alternatives to insurance, I am left hanging. Here is my contact page.

Tuesday, April 17, 2012

The MSL and Object Tax

The Object Tax is a product of the same thought process as The Medical Savings and Loan.

Currently, the funding for health care is built around our employers. People are in health care groups chosen by their employer. Changing employers disrupts your health care.

The tax system is built around the employer as well. For most of us, the actual taxes are paid by our employers. We file a return and get some money back based on our individual experience.

The object tax makes the individual (and the nuclear family of the individual) the center of the tax universe.

In this tax system, people would have their entire paycheck deposited into a bank account with no taxes removed. The tax is collected when you go to withdraw money from this pre-tax bank account.

My personal observation in life is that the structure of society tends to follow the flow of money. The tax withholding system has money flowing from the employer to the government with a trickle of cash flowing back the individual.

The Object Tax flips this around. In the new system, the money flows from the employer, through the worker to the government.

Changing the flow of money would dramatically improve the status and influence of the worker.

Trivia: The current tax withholding system was designed by a Conservative named Milton Friedman?

I diligently file my taxes every year. The odd thing that I've noticed is that this complex process really doesn't provide me with a lot of information. I have a box of scrappy paper and piles of complex forms about the taxes withheld by others. The process does not provide me with a great deal of information about myself.

The Object Tax, on the other hand, provides individuals with a wealth of information about themselves, their income, possessions and spending habits.

Like the Medical Savings and Loan, the Object Tax would be a wonderful presentation on how we can achieve a restoration of America and the concept of self rule. All that is needed is a group of patriots who want to talk about restoring America. It involves a person contacting me.

SUMMARY: The object tax taxes an abstract object between income and consumption. In most cases the abstract object is a bank account. The tax could apply to other financial objects such as a house, a stack of gold coins, etc..

By taxing an abstract object between income and consumption, we can create a tax that combines the best of a progressive income tax and a consumption tax with a minimal amount of disruption. The object tax could be designed to encapsulate the current tax code allowing people to transition to the new system at their pace.

The tax replaces the capital gains tax, but satisfies the Buffett Rule.

Imagine a tax system in which you get your entire paycheck deposited into a savings account. When you go to withdraw money, the program would look up your personal tax rate. You would pay the tax when you withdrew the money. If you had $10,000 in your account and your tax rate was 25%. If you took $1,000 from the account, you would pay $250 in tax and get $750 in your pocket.

This tax reform would be incredibly easy to implement and would empower the people.

All that is needed is a group that is willing to talk to me. I live in Utah. I am not LDS. I am an American who loves the Founding Fathers and the American experiment in self rule.

Sunday, April 15, 2012

The Tax Collector

Our current socio-economic set up has turned our employers into the tax collectors and the primary source of our medical care. My goal is to break this dependency.

The Object Tax (Introduced in the Previous Post) has tax collection taking place in a bank.

The tax works as follows: You get your entire paycheck, with no taxes withheld, into a bank account. I will call this a pre-tax account. To spend the money, you need to transfer it to a post-tax account at a personalized progressive tax rate.

So, let's say you had $10,000 in your pre-tax account and your personal tax rate was 10%. You would only be able to withdraw $9,000. Let's say you withdrew $1,000 from the account. You would pay a $100.00 tax and get $900.00 in cash.

This system turns the banks into the tax collectors. Since banks are equipped to process money, this is the right and proper place to collect the taxes.

In this system, your retirement savings, health savings and rainy day savings can all gain interest in a pre-taxed state. It is only when you prepare to spend the money that you pay the tax.

This object tax is a de facto consumption tax.

Most consumption taxes, like the FAIR Tax and Sales Tax, turn our nation's merchants into tax collectors.

The object tax allows us to recreate all of the deductions and exemptions of the current tax code. Instead of a deduction, the program allows select expenses to be made tax free. If your $1,000 medical bill was deemed to be tax-exempt, then you could pay it from your health savings account without paying a tax.

The Object Tax eliminates the capital gains tax while satisfying the Buffett Rule.

Your investments will sit in a pre-taxed state. You can exchange one investment for another without having to pay a tax. I could sell stock A and buy stock B without having to pay a tax.

When a person goes to transfer money from an investment account to a spending account, that person would be socked with a progressive tax.

The progressive tax rate would be based upon a combination of a person's income and their networth. A billionaire like Warren Buffet would be taxed at the absolute highest rate on all of the money that he transfers to his personal accounts for spending.

Currently, America has two tax systems: There is one tax system for business owners and a second patronizing tax system for employees. The object tax creates one simple account based tax system for all people. The taxes are handled at the bank, which is equipped to handle transfers of funds. It eliminates the tax withholding, W9 forms, etc..

The Object Tax is a personalized progressive consumption tax structure that would help families take control of their budgets while providing the revenue for their company to thrive.

If your group would like to learn about this tax reform or about the Medical Savings and Loan, you can contact me.

Saturday, April 14, 2012

The Tax Reform Post

It's tax day … time for the annual tax reform post.

My proposal for tax reform is a thing called "The Object Tax." This bizarre sounding reform taxes an abstract object between income and consumption allowing us to combine the best of a personal progressive income tax with a consumption tax.

Taxes tend to discourage the thing being taxed. An income tax tends to suppress income and the creation of wealth. Many would like to switch to a consumption tax. It is difficult to make a consumption tax progressive.

Taxing an abstract object between income and consumption allows us to combine the best of both tax systems. Surprisingly, it is also simple to design an implement.

The basic idea is that all "financial objects" have a tax attribute set to N or Y depending on the tax status. In most cases, the "financial object" is a bank account.

The typical experience would be as follows: Your employer would deposit your entire paycheck (with no funds withheld) into a bank account with the tax attribute set to N.

When you go to spend the money, your bank would query the IRS for your tax rate and you would pay a progressive tax at your personal rate.

Let's say you had $10,000.00 in a pretax account and you tax rate was 10%. Your bank account would show that you had only $9,000 to withdraw.

It is possible to re-engineer all of the features of the current tax system. Let's say that you had an expense that was deductible. The program would allow you to pay for that expense without paying taxes.

Do you see how simple this tax system is? You put money in an account. You pay a progressive personal tax when you withdraw the money.

The program eliminates the need for payroll withholding and it eliminates the annual tradition of filing tax returns.

The object tax does more to encourage savings than a standard consumption tax. The tax happens when one transfers money from a pre-tax savings account to a taxed spending account. This encourages people start keeping better budgets.

Capital Gains and the Buffett Rule

The Object Tax solves the problem of capital gains. A capital gains tax has a negative effect on the economy because people make their investment decisions based on the tax and not on the value of assets.

If I have money invested in A, but felt B was a better deal; it would be good to sell A and buy B. The Capital Gains Tax means that I have to pay a large tax when I sell item A, which might discourage me from making a trade. This is a lost opportunity.

The object tax solves the problem. Each tax object has a tax attribute. I could sell investment A and buy investment B without paying a tax. However, if I sold investment A and transferred money to my personal spending account, I would have to pay the progressive tax.

The object tax fulfills the Buffett Rule. Warren Buffett would owe a higher progressive tax than his secretary (assuming his secretary was not in the top bracket).

Inheritance Tax

The inheritance tax is problematic. People have to pay a big tax when money transfers from parents to children. This high tax often forces people to break up small family owned businesses to pay taxes.

The object tax would allow people to inherit the tax status of their parent's assets. So, let's say the parents had a million dollar farm. The children could inherit the farm as a pre-tax investment. They could keep and continue to develop the farm without paying a tax. If they sold the farm, they would have to pay a progressive tax.

Reverse Engineering with Object Technology

The bizarre name for the object tax comes from the field of object oriented design. This is the design technique used to make most consumer and communication software.

One extraordinarily interesting aspect of object technology is that one can use the design technique to model the existing tax code, then transition to the new tax system with minimal disruption. It would be possible to keep all of the current tax code and allow people to transition to a new object based tax code at their convenience.

In contrast, tax reforms like the FAIR Tax and Flat Tax are disruptive. They would result in dramatic and unpredictable consequences.

As with the Medical Savings and Loan, I would love to find a group interested in free market economic reform to discuss the idea. If anyone wants to talk reform, they can contact me.

Wednesday, April 4, 2012

Pre-existing Nonsense

Imagine that Bill Gate had a pre-existing condition that cost $50,000.

Being financially astute, Mr. Gates runs out and buys a $15,000 health policy for a year knowing that this will save him $35,000.

But, Bill Gates is a billionaire. He can afford is own care. His $35,000 windfall is the result of leeching off the system.

In the health care debate, people keep screaming about pre-existing conditions. But the problem isn't pre-existing conditions. The problem is that many people have health conditions that they cannot afford to treat.

If we were intellectually honest, we would recognize the problem for what it is. There are people who need help. Being a generous people, Americans want to find ways to help these people.

Unfortunately, trying to help people through intellectually dishonesty has a tendency of biting back. Laws that require insurance pools to accept clients to accept people with pre-existing conditions will create new avenues for people seeking to game the system.

For example, in the government run health exchanges, the players who've gained the system will be able to use pre-existing condition laws to offload policyholders with high claims experience onto outsider companies who are legally compelled to accept people with pre-existing conditions.

In the Community Organizing world, Cloward-and-Pivens advocated a strategy of advancing socialism by encouraging followers to overwhelm charitable organizations with appeals. Organizers seeking to gain influence can add the power of the new laws involving "pre-existing conditions" to further this strategy.

An intellectually honest system of health care reform starts with the realization that some people have insufficient resources to fund their care.

The first step in an intellectually honest approach to health care is to identify what is reasonable to expect people to pay for their care. The Medical Savings and Loan gives people the stated goal that those who can self-fund their care should self-fund their care, and then gives participants tools to track expenses and income.

The program will give policymakers information about what it is reasonable to ask people to pay for care.

Government reports indicate that the US spends from 17% to 19% of the GPD on healthcare. If this is so; then it is not unreasonable for individuals to spend 20% of their income on care. We might decide to start rendering assistance for people spending 25% of income on care.

The conversation about what is reasonable for a person to pay for care helps us decide what is unreasonable. Once a person is identified as having unreasonable health care expenses, we can then proceed to openly transfer resources to pay for the care.

The current health care debate is dominated by talking points like "pre-existing conditions." This dialogue is intellectually dishonest. The fact that a condition exists is not a problem. Bill Gates can pay for his own health care. The problem is that many people cannot.

By approaching the health care puzzle in an intellectually honest fashion, we are able to decide what is reasonable and unreasonable expenses and make problems to help those who face unreasonable expenses.