YOUR GOVERNMENT: Health Care

My fellow Americans, good afternoon. I would like to talk to you about one of the most pressing issues facing us as a nation today: the question of what to do about health care.

This is an aspirin tablet – just a simple, generic pill. If you buy a big bottle – say a thousand of them -- at a Walmart or a drug store, they cost about two cents each.

If, on the other hand, you find yourself in a hospital, and have the courage to face the itemized bill sent to you by your insurance company, you will often find this exact same, two-cent aspirin tablet marked up: not ten times, to twenty cents. Not a hundred times, to two dollars. You will often find this simple, cheap, abundant pill marked up ONE THOUSAND TIMES, to twenty dollars. That’s not for an aspirin regimen, and it’s not for an aspirin bottle. That’s twenty dollars per pill.

And these kinds of enormous markups permeate the entire system, from the smallest item – like this aspirin pill – to some of the most expensive, like an MRI exam.

So what’s going on here?

Well, in our current system, standing between you and a two-cent aspirin are about 500,000 employees of the various private insurance companies. They have to be paid somehow. Their office buildings, computers, phones, office supplies, and electrical bills all must be paid for as well. This is called overhead, and that overhead is a big part of your insurance premium.

In addition, there are about another 500,000 people either employed directly by the government through Medicare, Medicaid, VA benefits, the FDA and all the rest or hired directly as doctors or hospital staff members whose sole job is to process the millions and millions of pages of applications, approvals, medical records and billing required by those government programs.

So when it’s all said and done, a stunning number – 42% -- of all the money raised in taxes and premiums never reaches the actual health care providers.

And what’s worse than that, maybe 40% of the health care we do actually provide is unnecessary: it goes to diagnostics and testing that ARE essentially there just to protect from out of control lawsuits. When all the dust has settled, about 30 cents on every dollar we spend on health care… gets spent on health care. About 70% of the money we spend goes into the monster feeding itself.

Nowhere else in our entire economy do we have two standing armies, totaling about a million people, standing in between what we pay for and what we get.

It’s a catastrophe. It’s a trainwreck. So what do we do?

Well, the answer is not to make things more complex, but to make them simpler; not to make things bigger, but rather smaller; not to make them more and more expensive with hundreds of thousands of bureaucrats and administrators, but to make things less expensive and more responsive by making them smaller, smarter, and local.

There are many plans to do this. One of the most interesting is one written not by politicians, or managers, or bureaucrats, or administrators; but rather by two life-long doctors by the name of Loel Fenwick and Richard Sugden.

The Fenwick-Sugden plan is very simple, really, and it has one goal: keep the money in the hands of the patients, because if it’s your money, you’re going to care whether that aspirin tablet you get billed for is going to come in at two cents or twenty dollars per pill.

Rather than paying a traditional insurance company, your employer would put that same amount of money into an Insured Contingency Escrow, or ICE account, with your name on it. It is nothing more or less than a personal savings account, held in escrow by a Savings & Loan. It can only be used for clearly defined contingencies, such as healthcare, disability and retirement. You would pay into the account too, as you do today for private insurance.

Individuals would then be able to chose and join a “chapter:” a collection of other people pooling their money so that they collectively get the best rates on procedures and bulk discounts. Included in these chapters are “co-pilots”: professionals who know the ropes, do the negotiating and help you make your own decisions about what to do with your own money. These people don’t work for the hospitals; they don’t work for the insurance companies; and they don’t work for the government – they work for you.

Any small items: a sprained wrist, sore throat, etc, would be paid for, in cash and at cash rates, from that individual ICE account. And any money you don’t use at the end of the year gets rolled over into the next.

Now suppose you have something more serious: a gall bladder operation, let’s say. A large enough operation could drain your ICE account. A catastrophic condition, like cancer, would certainly drain it, so included in the plan would be something called “stop-loss” insurance: big-ticket insurance to cover the most expensive outcomes. Stop-loss insurance is far less expensive because unlike current health care plans, it is not invoked for colds and flu, nor is it subject to mandates, restrictions, price-fixing, and the restraints of trade placed on the existing health insurance companies. 

This consumer-centered plan therefore, does several things, and all of them good.

First, it keeps the health care money you are already paying in your hands. You know how to shop for groceries and you know how to shop for furniture. It’s your money. You know what aspirin actually costs, and your co-pilot knows what MRIs and Carpal Tunnel Surgeries actually cost.

Second, it encourages people to look after their health--smoking, weight, etc. because this saves money.

Third, it pays the health care providers directly, immediately, and in cash: that cuts down their overhead and paperwork, which justifies the discount. That allows doctors to spend less time, effort and money filling out forms and spend more time practicing actual medicine.

Fourth, plan members agree to use Arbitration, rather than the courts, to settle legal claims. Arbitration protects the rights of patients to receive damages but enormously cuts costs by reducing expensive, and often frivolous medical malpractice suits, lawyers, payouts and insurance.  

And best of all, by eliminating a million-man government and insurance company overhead, and forcing health care providers to list prices and compete for your business – like everyone else – we as a nation save enormous, really unimaginably enormous amounts of money.

We would save so much money that the government could easily make the ICE account and private, stop-loss contributions of every single American currently unable to afford health care: No more second-class status, no more Medicare stigma, no more VA delays or overcrowding. Everyone’s account would have money as green as the next person, and they too get the benefits of amassing resources over time until they no longer need the government. Isn’t that a thought?

And to do all of this – to use the power of competition and the free market to pay for everyone who genuinely could not afford heath care today -- would cost us about 25 cents of every dollar we ended up saving by eliminating this bloated, uncompetitive, unresponsive, spectacularly wasteful and expensive status quo.

My fellow Americans, if we can use common sense; smaller, simpler, more local networks; and the incredible power of competition to drive down cost and drive up quality, then we can get our health care back towards costing two cents per aspirin, and not twenty dollars per aspirin. And best of all, this can get us back closer to the world where you knew your doctor all your life, where you were a friend, not an account or a social security number, and back to a place where if you were not provided excellent service at a fair price you would take your money someplace else, where you would be.

Anything that adds even more layers between you and the cost of this little pill is going to fail, and bankrupt the country. Anything that removes those layers of overhead, and returns power to the patient will succeed. It’s really just that simple.

Thank you again for your time. God Bless you, and God Bless America. 

Published Nov 18, 2013