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Opposite of Obamacare – Part 1/4 – Businesses Should Not Buy Health Care

Opposite of Obamacare – Part 1/4 – Businesses Should Not Buy Health Care
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This is part one of a four part series on the solution to replacing Obamacare. Remember that free enterprise works when the consumer makes a buying decision based on price and quality. Unfortunately Obamacare has taken the opposite approach. The result has been a disaster with rising prices and falling quality.

The first principle we need to implement is very straightforward.  Businesses should not buy health insurance for their employees.

Before you scream in pain, I’m not saying employers should not pay for health care, just saying they should not buy it directly. Employers should contribute to a health savings account and the employee should buy healthcare themselves from this account. 


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The concept of a tax free health savings account is not new, but it should be expanded to support payments for all health care, including insurance, payments to doctors, and medicines. And perhaps more!

Employees then MUST take ownership of their decisions in buying healthcare products. And individual confronted with such decisions will select products based on price and quality, taking care of their own specific needs and paying attention to details that are important to them, including costs. They will also ignore items that are not important to them.

Now let’s take that to the next level. With careful shopping an excess will build in the health savings account. The individual can cover a larger deductible, therefore his monthly premium can go down. So the account builds faster. 

So let’s add some incentives to this. If the insurance, deductible, and prescriptions, etc. are all paid for, and if there is extra money left, perhaps the individual can be rewarded for his frugality. Perhaps the individual could use the extra for health related activities, such as vitamins, health club dues or even the occasional massage. What better mechanism for ensuring the individual is focused on his/her own health?

Health coverage by employers is a remnant of World War II, when the government was forced to freeze wages to prevent rampant inflation. It seemed with a large percentage of able bodied men engaged in the war, the  shortage of labor was causing salaries to rise dramatically. Once wages were frozen, companies used health benefit packages to entice the most qualified workers.

Then, as now, employers provide health care as part of their bottom line business strategy.  This is not some altruistic impulse, it helps them attract and keep good employees. Ultimately the employer buys a group plan that is best for itself, easiest to manage and yet impressive enough to be attractive to prospective employees. They spend extra for brand names and for universal coverage, and customization is minimal.

However an individual on a company plan does not care about cost, he is not paying for it. This separation of consumer from price and quality is the problem. It means the consumer can demand more but he is separated from the consequences of a price increase. Its pressure from only one side of the equation, so prices must go up.

And that is a major problem with Obamacare – no mechanism to allow competition to force prices down. While the employer isolates the individual from the price and quality of healthcare, true competition is impossible.

Now do you get the picture? With individuals buying their own plans, the incentive is to get the best deal, because once you are covered, you get to enjoy the rest. The result is a population attuned to health and lower prices in health care.

Doctors will tell you the healthiest people are the ones interested in staying healthy. This one simple change in health care policy guarantees a healthier America at a lower cost.

Comments? Send to joe1@punchingbagpost.com.

Opposite of Obamacare – Part 1/4 – Businesses Should Not Buy Health Care

Opposite of Obamacare – Part 2/4 – Separate Health Insurance from Health Maintenance.

Opposite of Obamacare – Part 3/4 – The Federal Government’s Role

Opposite of Obamacare – Part 4/4 – The X-Prize Strategy

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2 Comments

  1. Don

    Just commenting on this part, not having read the rest yet.
    Your ideas have some merit, but fail to take into account human nature and the interactions in the employee-business relationship. You need to think it through some more:
    1. The bargaining power inherent in (at least large) companies is lost when the consumer must pick his own insurer, not to mention the difference in the research ability of company employee(s) dedicated to finding insurers as opposed to individuals with many other things to do.
    2. The consumer doesn’t always do what is best for him, especially when he doesn’t have to pay for it:
    a. The company is still paying for it, you’ve simply moved the choice factors from it to the employee.
    b. Doing what you suggest will cause a shift in the fundamental associated thought patterns of employees. Because they are being given money, they will come to think of it as part of their pay, as opposed to a benefit, and it will become subject to the ‘union mentality’. This is the mindset that makes a person who is hired to mop 200 sqft of floor believe that he should be paid 50-60k/yr, among other things. Over time, this always pushes into destructiveness.
    3. Your plan removes the payor from the purchased product, which is just as bad as removing the recipient from the product choice.

    Reply
    • Joe Gilbertson

      Don,
      1. Actually the bargaining power is exactly the point. Businesses buy insurance based on the generic needs of its employees and the needs of the business, individuals buy based on their own particular needs. The idea is to get the actual consumer of the services as close to the provider of services as possible. Anyone in between will cause prices to rise. As long as the plan is certified good, and the basic details are clear, the consumer should shop on price.
      2. The consumer is free to not do what is best for them. But if the money is available and can’t be spent otherwise, they will make decent decisions on what to buy.
      a. Exactly, take out the middle man.
      b. Yes, I want that fundamental shift to where people feel responsible for their own health. Disagree that it is destructive. In fact, just the fact that they are taking ownership and responsibility for their own health, guarantees a bigger boost in overall wellness than anything that anyone can buy for them.
      3. No just the opposite, we are getting the payor closer to the purchased product. The goal of the plan is to have insurance only for those events not likely to occur, like cancer or broken bones. Insurance is NOT for maintenance items like checkups or flu shots. Insurance companies charge a premium of 40% for these things. If you want a time payment plan for these, do it directly with your doctor.

      Reply

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