| There are additional benefits to this program.
1. The money is owned by the participant. There can be no fraud as they can only defraud their own account. This means that insurance fraud as we know it goes away. This is as much as $300 per person per year.
2. Because each child will accrue well over $50,000 before graduating high school, before healthcare costs, parents may use this leftover money to pay for college or other education upon request, up to a specified amount, as a deposit their children’s home home or deposit into their children’s own MRSA.
3. Because most healthy, young working couples starting out will have accrued up to $100,000 by the age of 25, each person or couple may use part of this money, up to a specified amount, for the deposit on a home, dramatically increasing home ownership and decreasing the age at which it occurs.
4. Participants may dip into their funds for emergency uses, up to a specified amount and time period, generally for periods of unemployment, reducing the need for welfare while keeping incentives to find work high.
5. Rather than using insurance as a backup, all of the accounts in any bank or other system would have a pool system. Once an MRSA owner is forced to use more than $10,000 from their account for health expenses, 75-90% of the spillover is paid out of the pool. The pool’s monthly expenses would be divided up amongst the account owners each month. If there are 1000 accounts and the pool uses $100,000 that month, then $100 is automatically debited from each account that month to cover the cost of catastrophic losses.
6. As an option, a business program could be created that would be able to replace expensive workman’s compensation insurance with a similar “EmployeeCompensation Savings Account” that they administer in conjunction with a legal representative in place of paying into the social security program. This lowers the cost of creating more employment and increases incentives for reducing injured employees. It also puts money into the general market creating investment
opportunity.
7. There would be more money in the stock market and in the banking system for loans and investments, helping push forward the economy.
8. Having a reasonable amount of children for your income is incentivized, having more than is reasonable is not.
9. Accountants, bureaucrats, insurance companies add nothing to the wealth of the economy. The need for all of the above is dramatically reduced, forcing many to find jobs that add to the economy (no offense, but shuffling papers or financially harming doctors isn’t terribly helpful).
10. Medical care costs drop dramatically as health care providers become much more efficient and focused and everyone gets a “cash discount”, not just insurance companies.
11. Deadbeat parents can expect to have a reasonable amount of money taken from their accounts to help care for their children.
12. Costs of current retirees and those who elect to stay on the program will be funded by keeping the employer contribution as a buffer until the system is 100% switched over to the MRSAs.
13. Account owners must keep approximately $10,000 in the cash portion of their account, but may take overflow and put that in a mutual fund or other stock account to gain higher rates of return.
14. Bill padding by doctors and unnecessary procedures would drop dramatically, as would overmedication that is now common.
15. Banks, now competing to draw MRSA customers, would naturally begin to educate customers on ways of saving money so as to keep their insurance pool expenses low. By serving as a ‘health concierge’, banks win by helping to provide lower health costs and insurance pool charges to their customers.
16. Prescription drug costs would drop precipitously as customers naturally seek the best prices, are reluctant to pay exotic prices and investigate other drugs or methods of solving their healthcare issues.
17. Testing facilities will begin to market their services directly to the consumer with much lower prices and hospital/physician markup, possibly offering testing packages to promote preventative health care.
18. Insurance company style risk aversion is eliminated as banks will not have access to medical records or the ability to refuse an MRSA customer.
19. Healthcare and healthcare product providers will sign up for a more exclusive Visa/Mastercard style debit card that tracks all expenses and allows MRSA owners to pay for any and all allowed medical expenses easily. Allowable items will be electronically tagged as MRSA eligible and the option will be made to pay for these items with the MRSA card at the register. Software will allow you to pay for the healthcare items with the MRSA card, the rest of the items with other payment. Itemized receipts will automatically be uploaded into the MRSA account, allowing the bank to do a quick audit if the account triggers an insurance pool ‘overdraft’. The healthcare provider would be required to match the name of the person with a family member.
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20. At the end of the year, account holders can use their account to pay or help pay for the healthcare of others as long as it does not trigger the pooling feature of the system. This allows charitable donation of healthcare services or products for people not directly covered by the MRSA program, such as the homeless.
21. Because MRSAs get the young and uninsured into the program, everyone contributes a little to the healthcare system, even if they use no services that year, by contributing money to the insurance pool.
22. Because health care costs are lowered, some people may elect to pay for some or all of their yearly healthcare, short of extreme expenses, out of their own pocket, in order to leave as much money as possible in their MRSA.
23. Because doctors are freed from the hassle of dealing with insurance and government, they are far more likely to set up private clinics and practices, both in big cities and smaller towns, effectively decentralizing healthcare away from costly hospitals and creating greater access to care.
24. Over prescribed procedures, such as C-sections will drop precipitously as healthcare consumers more carefully weigh options and risks.
25. Because health maintenance costs could be deducted, preventative healthcare clinics, such as health clubs for seniors with on staff physicians will likely sprout all over the country, allowing more health monitoring and healthier living.
26. Any working person would be able to put enough money into their accounts to manage their health and their retirement, though some tweaking of percentages, deductions and caps may be necessary.
27. There are several possible ways of dealing with people that, for whatever reason, cannot put away significant money into an MRSA – those that can’t work, the mentally or physically disabled, etc.
a. The process could allow ‘gifting’ of medical care or even a portion of someone’s MRSA funds to needy family members, friends or even charity, the latter acting as a management team to help folks in need.
b. A portion of unused money from deceased MRSA holders could be put into a pool for the indigent.
c. A person could potentially be allowed to ‘adopt’ someone in need by claiming them as a dependent and provide them with an account in their name if they make enough money to take another deduction. These people would have to be someone who are unable to contribute significantly to an MRSA and are dependent on others for assistance. This allows family members or friends to assist each other as community members, helping to create more inter-reliance and family ties, rather than rushing to the government for aid.
d. Once current social security holders have passed on or have been weaned from the old system, a smaller employer ‘contribution’ which is now unused could be used to take care of only the most needy in society, creating universality by extending the program artificially to the <5% of the population that cannot fully participate easily.
e. A national sales tax on interstate only retail sales could generate a significant amount of revenue while helping to level the playing field for local businesses.
f. ?????
28. UHC creates less expense for the poor, but more expense for the upper classes. MRSAs drop the price for everyone, especially creating a low cost cash based health care business that will dramatically help even immigrants who now just pass on the cost to taxpayers and hospitals since the they currently have no hope of either affording insurance or a hospital bill. By creating a low cost method that favors cash rather than paperwork ridden insurance payments, everyone benefits, even those not directly in the program. Especially those not directly in the program. This then takes the weight off of the rest of the system, multiplying the benefits.
29. Employers would be responsible for filing the appropriate taxes and declarations for each employee and depositing MRSA funds into the account of the employee’s choice. Investment firms would do essentially the same thing, though personally, I would eliminate all capital gains taxes as that punishes investment. I think people should be taxed on actual monetary income that they receive, such as stock dividends, just as businesses should not be taxed on growing their business, just on growing profits, but I digress.
30. Larger businesses could create their own semi independent MRSA ‘bank’ if they choose, with which they could provide extra health benefits to employees or enter into agreements with nearby providers to offer their employees lower costs or annual checkups. Or the company could create their own health concierge services to help their employees get the best deals on health care.
31. Fraud is extremely easy to combat. There is little incentive for fraud by MRSA owners as, unless they can pad the bill dramatically, there is no payback. Will an MRSA owner work a deal with a chiropractor to rack up $20K worth of bills in a year? Not terribly likely as going into the pool would likely trigger an audit by the bank to verify the costs. And the chiropractor would have little to gain in the transaction and a whole lot to lose. There is little incentive for a thief to try to grab account numbers to try to buy healthcare items. Address and account verification, e-mail receipts for all purchases and/or picture ID requirements should easily squash any significant fraud attempts. A ‘verify by e-mail’ or ‘verify by text message’ system could easily be implemented, making MRSAs far more fraud resistant than a typical Visa card.
32. Insurance companies, eager to stay in the game, will become far more competitive to try to keep people from going to the MRSA system from regular SSS/Medicare/Insurance system. Therefore, those that fear making the jump will still benefit from the competition
33. Democrats, eager to keep people from abandoning SSS will become much more proactive and creative at reforming the existing system to keep people in the system, which also benefits those that remain with the older system.
34. The federal welfare system can piggyback on some of the systems created for the MRSA system. Rather than sending out welfare checks, an MRSA style card, with built in limitations could be used. This creates itemized statements and tracks where and how welfare recipients spend their aid and also lock out certain types of purchases.
35. Similarly, Medicare/Medicaid and government health insurance programs that remain would benefit by offering recipients MRSA program cards that allow those on the old system to pay doctors as quickly and easily as an MRSA owner, allowing the government to reap the same benefits of simplicity and price offered to individuals.
36. Employers who wanted to offer additional benefits to their employees could create business MRSAs that covered their employees completely, allowing them to keep most of their money in the MRSA or offer companion programs that allow employees to put more money into their MRSA than required or add bonuses into their account.
37. After the age of 65 or so, a second credit card would be created for each person to use for non-health related living expenditures. Similar to a social security check, the monthly expenses would be capped based on calculations intended to keep each person from running out of money before they die.
38. In order for someone to retire earlier than the preset age for the MRSA, they would need to save money in a separate account to cover them from the age they retire to the age when the MRSA’s retirement fund would activate.
39. In order to handle cases where people outlive their accounts, the pool would activate full time as soon as their accounts hit zero. The pool would replenish itself from the rest of the accounts in the system. A “liquidation fee” could be charged to the account when an account holder dies with leftover funds. This fee could help replenish the pool’s costs for long living members, while still leaving monies that could be passed on to descendants.
40. Veteran care could receive the biggest boost from the MRSA system. Rather than continuing to fund specialized veteran care, MRSA type cards could be supplied to veterans to handle their care through normal healthcare providers. The amount usable each year could be tailored based on the obligations made by the armed services. For instance, soldiers permanently injured could have more open ended MRSA cards, whereas other service members, while others simply get a supplemental card to take care of a preset amount per year. This would allow the sell off of most VA buildings and a dramatic reduction in overhead and cost.
A few case studies:
Steve is a high school grad, 18 and single, gets paid $10/hour, 40 hours a week and grosses $20,000. He pays zero taxes to the government, but pays 25% or $5000 to his account and averages $2000 per year in healthcare costs over his working life. He puts $25K of his account down on a house at the age of 28. If his pay never increased, he remained single and he worked for 50 years and got 4% interest in the bank, he would retire with about $360,000.
George and Emily go to college for 4 years. They make negligible money until the age of 23 and get married after college. They get relatively average paying entry jobs and make $80,000 between the two of them. Because they each have a $10,000 deduction, they are just at the dividing line of not paying any taxes and are putting away $20K into the bank. By the time they have twins at 28, their salaries have improved a bit, to $100,000 combined income and the kids allow them to deduct an additional $5000, meaning they still just avoid taxes. Within the first 5 years, they’ve socked away $100K. They take out $30K for a down payment on a home and $10K for the birth of the kids, dropping their account to $60K. For the next 18 years, they are putting $25,000/year away, spending about $5000 on average per year for family healthcare. At the age of 46, their kids are off to college and they have $650K in the bank after healthcare costs. They take out $100,000 for the cost of their kids’ educations, but offset virtually all of that of that over the 4 years with their deductions and interest. At the age of 50, their contributions are back down to $20K and their total income is now $160K. 25% of their income is $40k, so they are paying $20,000/year in taxes. At 50, they have $650k in the bank and are contributing $17k after an average of $3000/year in medical expenses. They retire at 60 with $1,175,000 in the bank and never even dabbled in the stock market. They never made more than $80,000/year each and only paid $100K in income taxes closer to the end of their career.
Linda has paid $100K into social security over 20 years. She decides to switch to the new program. At $60K/year in salary and with two kids, she pays no taxes under the new program so she elects to switch. She puts about $12,000 net per year into a mutual fund that grows an average of 8% each year and retires with close to $1M in the bank. Should she live long enough to use up her savings (not likely!), she will be able to take money from SS in the normal fashion. If she does not, 50% of the remainder can be willed tax free to her children’s MRSAs. The other half goes to a fund for healthcare for the disabled or otherwise unable to work and save significantly towards an MRSA program.
Gordon is quite successful. He made $2,100,000 last year. Like most people, his MRSA will grow to about $1M over time based just on he and his wife’s deductions. He knows he can’t keep his lifestyle up in retirement without help. He has the option of putting extra money into his MRSA or any other vehicle he chooses. His gross tax bill is $525,000. Because he can only deduct $25,000 for he, his wife and his kids, he pays $500,000 in the form of a flat tax on his income. He can’t deduct his lavish home’s interest or other lifestyle expenses, so while his tax rate was higher the previous year under the more complex tax code, he actually pays a little more this year because he has fewer deductions. On the other hand, he didn’t have to hire a room full of tax attorneys, nor go through elaborate plans to try to lower his taxable income, nor worry about discrepancies with the IRS.
Eduardo is a Mexican immigrant, living purely on cash from the work he does. He can’t afford $500/month for health insurance, nor all but the most basic healthcare and can’t get a social security number to create an MRSA for himself until someone solves this problem. However, with the MRSA system, healthcare cost has dropped enough that he can now afford a lot more healthcare than previously. Moreover, since his employer has a business related MRSA for workman’s comp purposes, he can extend some basic coverages to Eduardo and his family so they don’t need to ‘dine and dash’ at the emergency room.
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Moe Lane
PG DeFreese
Victoria Coates
Daniel Horowitz
Dan Spencer
Great idea - one step futher: UNIVERSAL SAVINGS ACCOUNTS
Freedoms Truth (Diary) Friday, August 28th at 4:56PM EST (link)Great idea! It’s an idea I’ve thought of myself.
I extend it one step further – include education spending as well…
UNIVERSAL SAVINGS ACCOUNTS.
This can be used for tax-free expenditures in health and education and can be used as a vehicle for retirement. The flexibility means that you can – if you need – dip into it for medical emergencies, and for those with children ,you dont have to divide between your kids college and your retirement. Why not 1 savings account for all?
Freedoms Truth,
Travis Monitor – http://travismonitor.blogspot.com
Austin, TX
Universal Savings Accounts - "USA Saves"
Freedoms Truth (Diary) Friday, August 28th at 5:02PM EST (link)I talk about it here:
http://travismonitor.blogspot.com/2009/05/transformational-agenda-for-right.html
Choice Agenda: Universal Savings Accounts – “USA Saves” – This simplifies the plethora of tax-advantaged programs by making a simple and portable “USA” that covers the current Coverdell IRA, IRA, Roth IRA, HSA, etc. A simple pre-tax and tax-advantaged account for all qualified expenses, including healthcare and education, would be a key component of the ‘choice agenda’ for education, healthcare and retirement.
Freedoms Truth,
Travis Monitor – http://travismonitor.blogspot.com
Austin, TX
Good theory but I see at several fatal flaws....
azred (Diary) Friday, August 28th at 5:17PM EST (link)First, your sample medical costs seem far too low, especially in the 50+ years. $3000/yr avg? The blips of health issues would have to be next to nothing to sustain that.
Second, the banking industry is NOT the reliable entity for managing a MSRA pool, auditing the expenditure of the pool etc. They have a tough enough time managing a single account, without screwing that up.
Third, the fraud will not go away. It will just move. The assets of the MSRA pools will be subject to compromise in many fashions. It can be done, but will be prone to other issues.
Lastly, there will be a large enough percentage of the population that will a) have difficulty managing their MSRA, or b) embezzling funds from themselves (the new fraud). Policing this will be a monumental task, particularly since the size of the nest-egg will offer far too much temptation for misuse, overspending, etc etc.
I am a current HSA participant, and for the most part, it is a much better option. I do like the MSRA theory, but I am not convinced it is as rosy of an outcome as you have portrayed. So convince me, and I will be a voice to share with my Sens and Congressmen as an alternative.
Replies to the above 'flaws'
john_ashman (Diary) Friday, August 28th at 5:41PM EST (link)1. Healthcare spending now is about $7000 or so per person. By removing waste/fraud/abuse and rewarding competition, the price for a typical procedure or doctor’s visit will drop to half almost instantaneously. This is not dreaming, this is a real effect of paying cash. Further, removing the incentives for over testing, over medicating and needless surgeries can drop the average cost to more like $2000 per capita. There is a terrific incentive for healthy living – live healthy, keep your money, retire rich. $500/month on pills? Or a better diet, quit smoking and exercise? Pretty easy choice when it’s your money on the line.
2. I have to disagree. The banking industry is pretty reliable, though it certainly doesn’t preclude other entities popping up with the sole purpose of managing MRSA pools, but the banking industry already has the necessary infrastructure in place. You would have the choice over who has your account.
3. Waste/fraud/abuse is ALWAYS possible, but is substantially less likely. For instance, I had a dentist overcharge the insurance company $1000 and the insurance company never knew. He couldn’t have overcharged ME $1000. No way, no how. And if I cared about insurance companies, I’d have turned him in, but I don’t.
4. You can’t worry about the people that will try to fritter away their account by finding ways of defrauding themselves. If someone figures out a way to use their MRSA debit card on a pair of sneakers, that’s their problem, not mine. Let them. Only if they are dipping into the MRSA overflow pool or their catastrophic insurance policy should anyone even bother to take a look at it. The incentive to defraud yourself is incredibly low compared to the incentive to defraud an insurance company.
I hope this settles these questions for you. Although no plan could ever be perfect or flawless, I believe I can address every substantial flaw with a more reasonable answer than can the proponents of ObamaCare or single-payer.
Ok...
azred (Diary) Friday, August 28th at 8:42PM EST (link)1. Still skeptical, mostly because of the Obabble of how the savings will be had in his dream world.
2. The fees that banks (or any other entity) will reduce a) the investment/interest yield on these accounts (Exante – my HSA management bank charges for keeping it, using it, so improvement is needed here). Competition hopefully would reduce these costs, but this is the trend of banks today – more and more fees to erode your return.
3. True. But go in with eyes wide open. Just think identity theft, only now the nest eggs are much larger (on avg) for the individual target.
4. The keep ahead of the Jones attitude is still alive and well, though it is taking a good dose of reality. I agree, you blow it, you lose. But safeguards have to be in place to ensure these idiots don’t a) create more pain for themselves than needed, and more importantly, b) that their stupidity does not equate to everybody else bailing them out (bleeding heart mentality).
Overall I like it. But you will have to find two Grand Canyons to fill with the libs that will huff “over my dead body!”
Wish granted???
USA vs MRSA
john_ashman (Diary) Friday, August 28th at 5:55PM EST (link)HI FT,
In essence, the MRSA IS a USA account,though your name is certainly better and more sellable than one that coincides with a germ. It would allow you to use it for your child’s education, your education, downpayment on a house, a jobless event, etc. It would simply require that you ask the managing bank to grant you a temporary waiver or specialized debit card or check for the use. I think the main difference is how the money gets in. With mine, it is not a tax deduction, but a 100% diversion of all or much of your tax bill to the account.
On another subject, I’ll be interested to see what you think of my Contract with America II as it parallels your 14 point plan in a very coherent fashion. I believe mine also has 13 or 14 points, rather than the original 10.
Regarding 1, 2 and 3....
john_ashman (Diary) Friday, August 28th at 11:37PM EST (link)If you look at the cost of elective, often cash paid, surgeries, they’ve dropped substantially even as other surgeries have exploded in cost. Many heart surgeries are now as routine as a boob job (and seemingly no more dangerous), but cost 10 or 20 times as much. Eye surgeries are down in price. Plastic surgery of all kinds. If you look at the PATMOS concept, they are charging half of what other doctors charge, even less than half, purely due to the cost savings of cash. Now imagine this on a broader scale. It is incredible what Dr Berry saves his patients per year.
Hopefully, there will be such a desire to hold these accounts that the fees will drop to near zero, but even at several $hundred per year, it would have an administration cost that is less than Medicare and Social Security, one of the vaunted attributes of single payer.
As for fraud, it would be easy to put delays into the system so that you are notified via e-mail or phone text every time a transaction is registered and giving you 24-48 hours to block the transaction if it is fraudulent. This type of system is now in place at some banks. I get a text every time a check clears, for instance.