I originally imagined the Medical Savings and Loan as a product line offered by an insurance company. This plan was for companies that wanted to give their employees greater direct control of their health care.
I had temporary access to state actuarial data. I explored this data asking the question: which group would fare the best with a transition from insurance to the Medical Savings and Loan. To my surprise, it was the working poor.
What I discovered was that the working poor were paid health premiums but were being short changed on the care received. After paying a health premium, the working poor had no money for paying the deductible. Even worse, when trouble happened, they couldn't pay the next year's premium.
The working poor pay all sorts of money into insurance and get thrown onto the welfare roles when they need care.
I concluded that the working poor would be better off skipping insurance and putting their health care dollars into a structured savings plan.
Realizing that the working poor were drastically underserved by insurance, I developed a second version of the Medical Savings and Loan for the working poor.
In this plan, a charitable foundation would offer interest free health loans to people with unmet needs.
If a person accepted the loan, the foundation would assign a case worker and slam him into a structured savings program.
The charity isn't expecting to get the money back. They would benefit by getting some money back. Let's say a charity lent out a million dollar and got half of what they paid back for new loans. If they repeated this process, they would be able to buy $2 million in care.
The Medical Savings and Loan as a charity has the effect of helping the working poor optimize their personal resources and it helps the charity optimize the impact of its giving.
The program would also decrease the number of working poor who fall into the welfare roles.
There could be some immediate positive impact in developing a social policy around the Medical Savings and Loan.
For example, The Medical Savings and Loan could reduce the insanity of people showing up at expensive emergency rooms for primary care. If the working poor had the choice of getting slammed with an expensive loan at the emergency room or getting slammed with a smaller loan at a charitable clinic, most would head toward the lower cost clinic.
The Medical Savings and Loan as a charity is different from the Medical Savings and Loan as an insurance line.
Through the years, I've developed different configurations of the same concept to address different health care challenges.
When people ask me for specifics of the Medical Savings and Loan, I actually have to respond that I've large number of different configurations of the program to address different needs.
The idea that the Medical Savings and Loan can be configured as a charitable organization is very much in my mind.
I've de-emphasized it because I want to concentrate on the concept of self-funded care.
I contend that our health care debate is backwards because we start from the wrong place. The health care debate should start with a discussion of the needs of people who are able to self-fund their care, then it should move into a discussion of what to do with the people who can't.
When we start the debate at the end and work back to the beginning, we end up with a backward health care system.
If I can ever find a place where I can give my presentation, I will talk about creating a system to help people self finance their care for an hour. Then I will talk about how the program helps people who are not able to self finance their care.
Wednesday, February 8, 2012
Tuesday, February 7, 2012
The MS&L as a Product Line
I've been vague about the specifics of the Medical Savings and Loan because I see multiple ways to implement the concept. I first conceived of the plan as a product line to be offered by an insurance company. I later explored the idea as a massively distributed business with no insurance company involved.
Currently insurance works as follows: Actuaries analyze the risk of a group. Underwriters speculate on the cost of the risk and decide how much they need to charge to cover that risk. The insurance company then bills this premium to all the members of the group.
The insurance company now has a single large pool. When members of the plan need care, they place a legal claim against that pool.
In the product line version of the Medical Savings and Loan, the insurance company simply starts doing the accounting of medical expenses and premiums as if policyholders were putting their own money on the line.
To create the full experience of self funded care, I eliminated the deductible and co-payments and changed the titles of insurance agents and claims adjusters to "Health Care Advocates." Policyholders would have access to a web site that would show their health care experience presented as if they were directly paying for care.
This program would include a projection of future health care expenses, to encourage policyholders in financial planning. People would occasionally have meetings with the advocates to discuss financial planning.
In standard insurance, the insurance company analyzes the experience of a group over a year. This new program still looks at the experience of a group over a year, but it also analyzes the full life experience of each policyholder.
The savings accounts, of course, would be real. Policyholders would build equity in their accounts. This equity would be affected by health care decisions.
The goal of the program is to re-establish the concept of self-funded health care. Each quarter, you would get a policy statement showing your past health expenses, your projected health expenses and how much you have saved in your account. If your savings are insufficient for your projected expenses, your employer would be advised to increase the amount you deposit in your account.
Policyholders would be given greater latitude in negotiating health care with providers directed by the advice and consent of the advocates.
The loans are a bit gimmicky. Policyholders will have access to health loans to assure they have adequate buying power to pay for unexpected expenses (or preventative care).
The loans take two tracks: If a policyholder has normal health expenses, he would be expected to pay back the loans.
If a person has an abnormally high ratio of medical expenses to income, the accounts will go into review. If the review determines that the policyholder is doing a good job holding down costs, the review board is likely to write off the loans. If the person has difficulty managing care, the policyholder would be moved into a managed care.
The Medical Savings and Loan as a policy line is for companies that want to maintain a relationship with an insurance company, but want a product that gives their employees greater control over their expenses.
The new product line will tell employees that, if their life time ratio of medical expenses to income is below a given amount, they are expected to self fund their care from their savings account. The program would take a slightly larger chunk of one's paycheck than a standard insurance policy, but this extra money will build up in the employee's savings account.
The goal of the program is to help people build sufficience savings to cover their expected expenses. Young/healthy employees will periodical meet with the advocates to discuss their savings plans and project future expenses.
The loans are a gimmick to assure that policyholders have adequate buying power for their health care needs at any given moment.
If an employee has insufficient funds for a medical expense, they will get a loan. This will likely trigger an increase in the amount they pay into their savings account each month.
The program will compare the ratio of medical expenses to income. If a person has unusually high expenses, the policyholder will either see their loans written off or they will get put into a managed care program.
Policyholders will see this new product line as insurance with a catastrophic deductible based on their lifetime income.
This product line has policyholders building a substantial amount of equity in their savings accounts. People who can self fund their care are expected to self-fund their care.
The Medical Savings and Loan as a policy line preserves the insurance company intact.
Policyholders with low health experience now completely own their risk. To these people, the insurance company is now just a financial service provider.
The insurance company will continue to underwrite the catastrophic health expenses of a pool and will underwrite the loans.
The insurance company will charge employers a premium to cover the cost of catastrophic care, re-insurance, the cost of the loans, actuarial expense, legal expenses and infrastructure expenses.
The insurance company is still huge.
This program would have the same amount of money as standard insurance. The policyholders would be taking a more active role in their health care. Most will be self funding their care which will restore the pricing mechanism in health care.
I originally designed the Medical Savings and Loan as a policy line to be offered by an insurance company. It would be ideal for small companies that wants to give people greater direct control over health care expenses.
I later developed a massively distributed model that breaks down all of the functions of the insurance company into small independently owned businesses.
Currently insurance works as follows: Actuaries analyze the risk of a group. Underwriters speculate on the cost of the risk and decide how much they need to charge to cover that risk. The insurance company then bills this premium to all the members of the group.
The insurance company now has a single large pool. When members of the plan need care, they place a legal claim against that pool.
In the product line version of the Medical Savings and Loan, the insurance company simply starts doing the accounting of medical expenses and premiums as if policyholders were putting their own money on the line.
To create the full experience of self funded care, I eliminated the deductible and co-payments and changed the titles of insurance agents and claims adjusters to "Health Care Advocates." Policyholders would have access to a web site that would show their health care experience presented as if they were directly paying for care.
This program would include a projection of future health care expenses, to encourage policyholders in financial planning. People would occasionally have meetings with the advocates to discuss financial planning.
In standard insurance, the insurance company analyzes the experience of a group over a year. This new program still looks at the experience of a group over a year, but it also analyzes the full life experience of each policyholder.
The savings accounts, of course, would be real. Policyholders would build equity in their accounts. This equity would be affected by health care decisions.
The goal of the program is to re-establish the concept of self-funded health care. Each quarter, you would get a policy statement showing your past health expenses, your projected health expenses and how much you have saved in your account. If your savings are insufficient for your projected expenses, your employer would be advised to increase the amount you deposit in your account.
Policyholders would be given greater latitude in negotiating health care with providers directed by the advice and consent of the advocates.
The loans are a bit gimmicky. Policyholders will have access to health loans to assure they have adequate buying power to pay for unexpected expenses (or preventative care).
The loans take two tracks: If a policyholder has normal health expenses, he would be expected to pay back the loans.
If a person has an abnormally high ratio of medical expenses to income, the accounts will go into review. If the review determines that the policyholder is doing a good job holding down costs, the review board is likely to write off the loans. If the person has difficulty managing care, the policyholder would be moved into a managed care.
The Medical Savings and Loan as a policy line is for companies that want to maintain a relationship with an insurance company, but want a product that gives their employees greater control over their expenses.
The new product line will tell employees that, if their life time ratio of medical expenses to income is below a given amount, they are expected to self fund their care from their savings account. The program would take a slightly larger chunk of one's paycheck than a standard insurance policy, but this extra money will build up in the employee's savings account.
The goal of the program is to help people build sufficience savings to cover their expected expenses. Young/healthy employees will periodical meet with the advocates to discuss their savings plans and project future expenses.
The loans are a gimmick to assure that policyholders have adequate buying power for their health care needs at any given moment.
If an employee has insufficient funds for a medical expense, they will get a loan. This will likely trigger an increase in the amount they pay into their savings account each month.
The program will compare the ratio of medical expenses to income. If a person has unusually high expenses, the policyholder will either see their loans written off or they will get put into a managed care program.
Policyholders will see this new product line as insurance with a catastrophic deductible based on their lifetime income.
This product line has policyholders building a substantial amount of equity in their savings accounts. People who can self fund their care are expected to self-fund their care.
The Medical Savings and Loan as a policy line preserves the insurance company intact.
Policyholders with low health experience now completely own their risk. To these people, the insurance company is now just a financial service provider.
The insurance company will continue to underwrite the catastrophic health expenses of a pool and will underwrite the loans.
The insurance company will charge employers a premium to cover the cost of catastrophic care, re-insurance, the cost of the loans, actuarial expense, legal expenses and infrastructure expenses.
The insurance company is still huge.
This program would have the same amount of money as standard insurance. The policyholders would be taking a more active role in their health care. Most will be self funding their care which will restore the pricing mechanism in health care.
I originally designed the Medical Savings and Loan as a policy line to be offered by an insurance company. It would be ideal for small companies that wants to give people greater direct control over health care expenses.
I later developed a massively distributed model that breaks down all of the functions of the insurance company into small independently owned businesses.
Sunday, February 5, 2012
It's About Participation
One of the big differences between the Medical Savings and Loan and insurance is that the MS&L invites people into actively participate in the financing and control of their health.
Insurance is like a spectator sport where your health care decisions are in play in some distant board room by people who you are unlikely to meet.
I've contemplated hitting the road to see if I can drum up interest in the Medical Savings and Loan.
I spent all my money last year chasing down leads. To hit the road I need a fundraiser.
There is a large number of health related fundraisers in play. The Susan Komen Race for the Cure springs to mind. The arthritis foundation has a program called Let's Move Together. The March of Dimes has evolved into the March for Babies.
These fundraising sports do a great deal of good.
To fund my trip, I will revive a sports fundraiser I developed several years ago called juggleball (read more).
Juggleball can best be described as a "participatory social network sports."
In this game you start with numbered balls. You play a game where you exchange the balls. At the end of the game you walk away with a different set of numbered balls.
If juggleball catches on, the balls will start traveling around between games. The juggleball.com site will use a mapping program to display where the balls end up. This is why I call it a social networking sport.
Juggleball is an ideal fundraiser for the Medical Savings and Loan because both ideas are about people playing an active role in their health and well being.
In the next couple of weeks, I will push heavily to build up interest in both Juggleball and the Medical Savings and Loan. My hope is to get funds to travel between Salt Lake and San Diego via Arizona. Anyone interested in hosting either a meeting about the Medical Savings and Loan or in Juggleball can contact me.
On the subject of fundraising: Here is my list of Valentines Affiliates.
Insurance is like a spectator sport where your health care decisions are in play in some distant board room by people who you are unlikely to meet.
I've contemplated hitting the road to see if I can drum up interest in the Medical Savings and Loan.
I spent all my money last year chasing down leads. To hit the road I need a fundraiser.
There is a large number of health related fundraisers in play. The Susan Komen Race for the Cure springs to mind. The arthritis foundation has a program called Let's Move Together. The March of Dimes has evolved into the March for Babies.
These fundraising sports do a great deal of good.
To fund my trip, I will revive a sports fundraiser I developed several years ago called juggleball (read more).
Juggleball can best be described as a "participatory social network sports."
In this game you start with numbered balls. You play a game where you exchange the balls. At the end of the game you walk away with a different set of numbered balls.
If juggleball catches on, the balls will start traveling around between games. The juggleball.com site will use a mapping program to display where the balls end up. This is why I call it a social networking sport.
Juggleball is an ideal fundraiser for the Medical Savings and Loan because both ideas are about people playing an active role in their health and well being.
In the next couple of weeks, I will push heavily to build up interest in both Juggleball and the Medical Savings and Loan. My hope is to get funds to travel between Salt Lake and San Diego via Arizona. Anyone interested in hosting either a meeting about the Medical Savings and Loan or in Juggleball can contact me.
On the subject of fundraising: Here is my list of Valentines Affiliates.
Saturday, February 4, 2012
Intro to Lifecycle Analysis
The Medical Savings and Loan uses a different mathematical model than insurance.
Insurance examines the experience of a group over a year. The Medical Savings and Loan analyzes the health and income experience of an individual over a life time.
Insurance might look at a group of 100,000 people and calculate the number of births, deaths, injuries and diseases for a year. An actuary calculates the expected costs of the risk. A speculator will then promise to cover the risk for a premium that is ten percent or so higher than the expected risk.
The Medical Savings and Loan looks at each person as a whole entity, kids are assumed to be part of the experience of parents until they come of legal age.
The model looks at each person's lifetime earnings and compares it to lifetime expenses. Imagine a program that creates a medical expense table for each person. It has the column age, earnings and expenses for every year from coming of age to retirement (or beyond).
When making the graph, one must include the premium employers pay for insurance. The graph below shows the income and health experience of a fictitious person. The columns are Income, Insurance, and Health Expenses
I made up data for a person who graduates and works though a series of jobs with a few good income years and employment gaps. He has two and a half kids along with a few health incidences. He retires at 65, then has a heart attack and dies at age 68.
I made the table quickly. I assumed the policyholder's insurance averaged around $6,000 a year, which is low. My made up medical expenses were also low. The chart does not include compensation for inflation.
In the Medical Savings and Loan you would take the life time medical experience of a large number of people. Aggregate the data to create a general model of the expected lifetime income and expenses of policyholders. You would use this information to help people create a structured savings plan for their health care. This second table shows data for 12 fictitious people.
In the structured savings program, you would take some of the money from the income column and the middle column and put that into the savings account. You would hold some of the money from the middle column aside to make a loan reserve and you would take a large chunk of the money from the middle column and hold it aside for grants.
So, let's you had a group of 10,000 average Americans interested in switching from insurance to the Medical Savings and Loan. This group is likely to have a total lifetime income of some $14B. They might pay something like $2.5B in insurance premiums and have an expected health care bill of $2.2B.
In the Medical Savings and Loan, you might do something like hold back half of the money in the insurance column for grants and loans. You would put the rest of it in the savings account.
To make sure the savings accounts are over-funded, I would move some of the money from the income column into the savings accounts.
It is likely that people in the Medical Savings and Loan would make better use of their money than do with insurance. The contend that the program would increase the health, wealth and wellbeing of participants.
Insurance examines the experience of a group over a year. The Medical Savings and Loan analyzes the health and income experience of an individual over a life time.
Insurance might look at a group of 100,000 people and calculate the number of births, deaths, injuries and diseases for a year. An actuary calculates the expected costs of the risk. A speculator will then promise to cover the risk for a premium that is ten percent or so higher than the expected risk.
The Medical Savings and Loan looks at each person as a whole entity, kids are assumed to be part of the experience of parents until they come of legal age.
The model looks at each person's lifetime earnings and compares it to lifetime expenses. Imagine a program that creates a medical expense table for each person. It has the column age, earnings and expenses for every year from coming of age to retirement (or beyond).
When making the graph, one must include the premium employers pay for insurance. The graph below shows the income and health experience of a fictitious person. The columns are Income, Insurance, and Health Expenses
I made up data for a person who graduates and works though a series of jobs with a few good income years and employment gaps. He has two and a half kids along with a few health incidences. He retires at 65, then has a heart attack and dies at age 68.
A Sample Lifetime Health Experience | ||||
|---|---|---|---|---|
| Age | Income | Insurance | Medical Expenses | |
| 18 | $5,000.00 | $200.00 | ||
| 19 | $12,345.00 | $50.00 | ||
| 20 | $8,000.00 | $75.00 | ||
| 21 | $7,000.00 | $1,000.00 | ||
| 22 | $3,000.00 | $0.00 | ||
| 23 | $6,666.00 | $300.00 | ||
| 24 | $14,000.00 | $500.00 | $650.00 | |
| 25 | $7,000.00 | $500.00 | $150.00 | |
| 26 | $33,333.00 | $3,000.00 | $90.00 | |
| 27 | $40,044.00 | $3,000.00 | $7,567.00 | |
| 28 | $42,000.00 | $4,000.00 | $4,438.00 | |
| 29 | $43,000.00 | $5,000.00 | $2,377.00 | |
| 30 | $44,444.00 | $5,000.00 | $5,555.00 | |
| 31 | $45,000.00 | $5,000.00 | $1,234.00 | |
| 32 | $46,000.00 | $5,000.00 | $800.00 | |
| 33 | $44,444.00 | $5,000.00 | $777.00 | |
| 34 | $32,000.00 | $2,500.00 | $800.00 | |
| 35 | $11,000.00 | $0.00 | $1,234.00 | |
| 36 | $52,000.00 | $6,000.00 | $2,000.00 | |
| 37 | $55,000.00 | $6,000.00 | $600.00 | |
| 38 | $56,000.00 | $6,000.00 | $700.00 | |
| 39 | $57,000.00 | $6,000.00 | $500.00 | |
| 40 | $54,000.00 | $6,000.00 | $600.00 | |
| 41 | $56,789.00 | $6,000.00 | $17,777.00 | |
| 42 | $55,555.00 | $6,000.00 | $800.00 | |
| 43 | $62,000.00 | $6,000.00 | $900.00 | |
| 44 | $63,000.00 | $6,000.00 | $500.00 | |
| 45 | $64,000.00 | $6,000.00 | $1,234.00 | |
| 46 | $55,555.00 | $6,000.00 | $500.00 | |
| 47 | $58,000.00 | $6,000.00 | $600.00 | |
| 48 | $52,000.00 | $6,000.00 | $300.00 | |
| 49 | $24,000.00 | $6,500.00 | $300.00 | |
| 50 | $52,000.00 | $6,500.00 | $2,222.00 | |
| 51 | $57,000.00 | $6,500.00 | $800.00 | |
| 52 | $55,555.00 | $6,500.00 | $921.00 | |
| 53 | $47,000.00 | $6,500.00 | $1,234.00 | |
| 54 | $51,000.00 | $6,500.00 | $4,721.00 | |
| 55 | $55,555.00 | $6,500.00 | $400.00 | |
| 56 | $52,000.00 | $6,500.00 | $300.00 | |
| 57 | $50,000.00 | $6,500.00 | $300.00 | |
| 58 | $48,000.00 | $6,500.00 | $2,312.00 | |
| 59 | $47,000.00 | $6,500.00 | $197.00 | |
| 60 | $42,000.00 | $6,500.00 | $1,978.00 | |
| 61 | $38,000.00 | $6,500.00 | $4,444.00 | |
| 62 | $36,000.00 | $6,500.00 | $634.00 | |
| 63 | $34,000.00 | $6,500.00 | $555.00 | |
| 64 | $32,000.00 | $6,500.00 | $300.00 | |
| 65 | $36,000.00 | $6,500.00 | $6,666.00 | |
| 66 | $0.00 | $500.00 | ||
| 67 | $0.00 | $471.00 | ||
| 68 | $0.00 | $84,000.00 | ||
| Total | $1,942,285.00 | $227,000.00 | $167,563.00 | |
I made the table quickly. I assumed the policyholder's insurance averaged around $6,000 a year, which is low. My made up medical expenses were also low. The chart does not include compensation for inflation.
In the Medical Savings and Loan you would take the life time medical experience of a large number of people. Aggregate the data to create a general model of the expected lifetime income and expenses of policyholders. You would use this information to help people create a structured savings plan for their health care. This second table shows data for 12 fictitious people.
| Experience of 12 Fictitious People | |||
|---|---|---|---|
| Name | Income | Insurance | Medical Expenses |
| Jack | $1,942,285.00 | $227,000.00 | $167,563.00 |
| Moonbeam | $2,432,647.00 | $334,572.00 | $147,219.00 |
| Bubba | $842,170.00 | $78,000.00 | $94,127.00 |
| Dana | $1,234,567.00 | $333,333.00 | $808,612.00 |
| Clara | $987,654.00 | $123,456.00 | $75,476.00 |
| Zimbutu | $1,212,121.00 | $250,000.00 | $222,222.00 |
| Hank | $1,111,111.00 | $302,123.00 | $157,841.00 |
| Aimie | $876,147.00 | $200,000.00 | $167,563.00 |
| Coco | $1,414,214.00 | $288,756.00 | $182,321.00 |
| Flo | $1,333,333.00 | $222,222.00 | $333,333.00 |
| Pedro | $2,134,587.00 | $275,000.00 | $123,456.00 |
| DJ | $927,796.00 | $84,000.00 | $177,642.00 |
| Total | $16,448,632.00 | $2,718,462.00 | $2,657,375.00 |
| Average | $1,370,719.33 | $226,538.50 | $221,447.92 |
In the structured savings program, you would take some of the money from the income column and the middle column and put that into the savings account. You would hold some of the money from the middle column aside to make a loan reserve and you would take a large chunk of the money from the middle column and hold it aside for grants.
So, let's you had a group of 10,000 average Americans interested in switching from insurance to the Medical Savings and Loan. This group is likely to have a total lifetime income of some $14B. They might pay something like $2.5B in insurance premiums and have an expected health care bill of $2.2B.
In the Medical Savings and Loan, you might do something like hold back half of the money in the insurance column for grants and loans. You would put the rest of it in the savings account.
To make sure the savings accounts are over-funded, I would move some of the money from the income column into the savings accounts.
It is likely that people in the Medical Savings and Loan would make better use of their money than do with insurance. The contend that the program would increase the health, wealth and wellbeing of participants.
A cumulative deductible
I've been reluctant to publish a formula for the Medical Savings and Loan because there are many different ways to implement the program. You can also examine the program from different perspectives.
This post examines the program from the perspective of the insurance deductible. Be sure to read the conclusion.
The goal of the Medical Savings and Loan was to create a structure in which people were directly responsible for the bulk of their lifetime medical expenses. Insurance would only kick in if a person had extraordinary lifetime expenses.
Standard insurance attempts to control costs using yearly deductibles and co-payments. If your policy had a thousand dollar deductible, you would be expected to pay the first $1000 of expenses each year. With the co-payment, you have to pay twenty bucks or so each time you visit a doctor.
These devices create perverse incentives without achieving any health benefits. For example, if your deductible was $1000, you might put off visiting a doctor for a year because you are under the deductible. The co-payment is a bad idea because it induces people to try to combine two medical visits into one.
The deductible does not cut costs. Once a person hits the deductible, they behave like a kid locked in a candy store for the night and eat everything in sight.
In the HSA model, people have a high yearly deductible (say $5000). The company would give people a thousand dollars or so extra to put into a savings account.
The large gap between savings and the high deductible magnifies the perverse incentives. When people cross the magic deductible line, they dramatically increase consumption.
The high yearly deductibles are extremely problematic for people with chronic conditions. By definition, a person with a chronic condition has high expenses every year. If your chronic back problem means you spend $4000 a year on therapy you will be left paying all of it under the standard HSA model.
A Cumulative Deductible
My idea for improving the HSA Model was to create a system with a very large cumulative deductible that spanned multiple years.
Imagine that you had $2K a year deposited into an account each year, and you had a $30K deductible over a 10 year period. In the ten years period, you would get $20K deposited into an account, but wouldn't get any money from your insurance company until you had over $30K.
You now have a system where a large number of people could self fund their care. This would help restore the doctor/patient relation and help restore the pricing mechanism in health care.
A Life Time Deductible
If you look at the lifetime health care expenses, you will find the expenses are distributed in some variation of a bell curve. I do not know the exact numbers. However it is likely we would find something like the average American has $200,000 in lifetime medical expenses and that 75% of people have less than $300,000.
One can extend the concept of a cumulative deductible to a full human life. In this case, we would want to create an insurance product with a lifetime deductible of $300,000 (with a corresponding amount going into the savings accounts).
An Income Based Deductible
One thing I discovered while working in insurance is that rich people spend more money on their health than poor people.
I see nothing wrong with a world where the rich CEO goes to the best doctors and working stiffs, such as myself, seek care in working class clinics.
I see a big problem, however, when these people are in the same insurance pool.
Since executives are prone to seek out expensive care, they have a much higher claims experience than the poor.
Continuing the discussion of deductibles, I've concluded that the deductible should be based on a person's disposable income, and not some fixed dollar amount.
A person who makes $500,000 a year should have a higher deductible than a minimum wage clerk making $16,000 a year. Even a thousand dollar deductible puts health care out of reach of the working poor.
But annual income varies. As a contractor, I find my income varies wildly between the years.
The ideal system would compare lifetime income to life time health expenses.
If you made a graph of lifetime income to lifetime health expenses, you would find most people are spending something like 15% of their income on health expenses. Let's say 90% of people spend less than 20% of their income on health care.
Looking at a model that compared lifetime expenses to lifetime income, one might conclude that the ideal system would have a lifetime deductible of 20% of income. Such a system would have most people negotiating care with their doctors and would restore the pricing mechanism.
If your lifetime income was $1,000,000; your lifetime deductible should be around $200,000. If it was $2,000,000, it should be around $500,000. If you made $10,000,000 you should foot the bill for the first two million dollars of your health care expenses.
Deductibles Are a Negative Space
In this article I discussed healthcare from the perspective of the deductible. I started by realizing that a yearly deductible creates perverse incentives which induce people to put off care when they are below the deductible and over-consume when they cross the deductible.
Creating a cumulative deduction reduces the problem.
If you create a cumulative deduction, why not go all they way and create a system that compares one's full lifetime income to lifetime expenses?
A system that looked at people as whole entities would likely have a lifetime deductible of $200,000 to $300,000 per person. The rich would have lifetime deductibles in the millions.
In such a system, the bulk of health care would come in the form of direct contracts between doctors and patients. In this case, healthcare policy becomes a matter of developing a system to help people negotiate and maintain records related to their care.
The Medical Savings and Loan is a system for funding healthcare that has an extremely high lifetime deductible that is based on one's lifetime income. The average American might be expected to pay the first $300,000 in care. In this system, most people would self fund their care. As such, the focus of the program is the mechanism for self-funding care and not the system to supplement the care.
In a world where people are used to discussing healthcare in terms of deductibles and co-payments, I would tell people that the MS&L is a system with a lifetime deductible based on one's lifetime earnings. The average American would be expected to pay the first $300,000 in care. The rich would need to pay the first million or so in care. The program uses a system of savings accounts and loans to help accomplish this goal. Of course, once people are in the Medical Savings and Loan, there will be little actual talk about deductibles and co-payments. People will be more involved in a conversation about making the most of the resources they have available for their care.
Friday, February 3, 2012
Traveling Fundraiser
A road trip through Arizona to San Diego would cost over a grand. I spent my mad money last year chasing leads.
There are many popular health related fundraisers. This list includes March for Babies (originally March of Dimes), The Komen Race for a Cure, Relay for Life (by the American Lung Association, Lets Move Together (by the Arthritis Foundation).
The fundraiser I would like to use is a game I invented back in college called JuggleBall.
JuggleBall is a social networking sport. Think of a cross between Twitter and Relay for Life.
In this game people get numbered balls. They play game that involves juggle relays. They leave the game with different numbered balls.
The score keeper records the balls people enter and leave with. The score keeper enters the locations and balls that traded hand on a computer.
These balls bouncing around will create a social network that can easily be mapped on a computer.
FWIW, I invented this thing well before FourSquare.
The sport itself is a discussion about the free market (which I will get into later).
If I do a trip to Arizona and San Diego.
My ideal itinerary would involve coming into a town, playing a game of JuggleBall at noon. The game would raise funds to pay for gas and a motel room. I would then give a free presentation on The Medical Savings and Loan. I would play a second game of juggleball the next day and move on to the next town.
If you live between Utah and would like to get in on the ground floor or a social networking sport, you can contact me.
There are many popular health related fundraisers. This list includes March for Babies (originally March of Dimes), The Komen Race for a Cure, Relay for Life (by the American Lung Association, Lets Move Together (by the Arthritis Foundation).
The fundraiser I would like to use is a game I invented back in college called JuggleBall.
JuggleBall is a social networking sport. Think of a cross between Twitter and Relay for Life.
In this game people get numbered balls. They play game that involves juggle relays. They leave the game with different numbered balls.
The score keeper records the balls people enter and leave with. The score keeper enters the locations and balls that traded hand on a computer.
These balls bouncing around will create a social network that can easily be mapped on a computer.
FWIW, I invented this thing well before FourSquare.
The sport itself is a discussion about the free market (which I will get into later).
If I do a trip to Arizona and San Diego.
My ideal itinerary would involve coming into a town, playing a game of JuggleBall at noon. The game would raise funds to pay for gas and a motel room. I would then give a free presentation on The Medical Savings and Loan. I would play a second game of juggleball the next day and move on to the next town.
If you live between Utah and would like to get in on the ground floor or a social networking sport, you can contact me.
Thursday, February 2, 2012
A MS&L Conference, Anyone?
My goal, starting in 2008, was simply to have a conference on the merits of self-funded health care. The conference would put forward the argument that our health care woes result from our use of group funding for individual consumption. The conference would feature the Medical Savings and Loan as a logical model for self-funded health care.
My goal is 10 libertarian leaning people in a room discussing free market health care reform.
I lived in Salt Lake City, which is a notably closed and oppressive community. The LDS Church has its heart set on socialized medicine. Every prominent LDS politician supports variations of PPACA.
- Senate Majority Leader Harry Reid was the primary sponsor of PPACA.
- Mitt Romney imposed similar legislation in Massachusetts,
- Huntsman and Hebert passed a version of the Health Exchanges in Utah, while actively suppressing discussions of alternatives.
Last year, I traveled to Phoenix, Reno, Las Vegas and Denver, but found it difficult to make contacts while sitting in a hotel room.
I've been tempted to make a second stab at driving down to Arizona at the end of February.
If there was a half dozen people who felt passionately about defending liberty and willing to spend a day discussing the concept of self funded health care, the meeting would be worth my time. (Any town in Arizona would do).
It would be nice to have a living room available for a meeting. If not, I found a really nice spot under a bridge over the Salt River where a half dozen people could meet. Here is my contact form.
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