The whole point of free speech is not to make ideas exempt from criticism but to expose them to it.

Monday, August 3, 2009

Real health care reform = assurance, not insurance. i.e. No more gambling with people's health.

My friend, Don Frankenfeld has been floating his idea about how to reform health care in America. He used to call it "FrankenCare" but then Al Franken happened. So he's still looking for a name for this thing, and it seems Sam Hurst may have found one for him. It's a little long... (but I digress.)

Here is Frankenfeld's plan in a nutshell, a back channel rebuttal by my other pal (Sam Hurst) and a flat out back stab back from Don to Sam. Keep in mind we are all the very best of friends here and have been carrying on like this for years.

New (to our circle at least) is Corey Heidleberger, who responded to the first post on health care below. What follows is in chronological order (more or less,) and also in keeping with the time honored Seniority Convention which dictates: "age before beauty."

Thanks for your contributions, all.


The fact is we are in the midst of a crisis, and the various players (doctors, hospitals, insurance companies, drug companies, employers, governments) are more-or-less inert about it. I don’t like a government single-payer system, and imagine that over the long run it may do more harm than good, but it is inevitable unless those of us who oppose it can come up with a decent alternative quickly.

A local businessman and I once did some spadework on the idea of Medical Savings Accounts, although they would be a complete departure from MSA’s as people now think of them. The premise is that, if each of us were self-insuring, then we would care how much money we spend, and we would demand some market discipline. Our plan would be universal and government funded. By the way, the businessman (a conservative Republican) believed so deeply in this concept that he paid thousands of dollars to an actuarial firm to confirm the basic soundness of the idea. The quick version:

For most people, the cost of health care is very low when young, and gradually escalates. There are exceptions, of course, which can be both catastrophic and hugely expensive. So…

At birth, each of us would get an endowed MSA from the government with, say $5,000 in it. Each year, on our birthday, an additional (say) $2,000 would be deposited. The money would be invested in an IRA-like vehicle. Each year, a small amount would be deducted from your account in return for catastrophic coverage. You would be totally responsible for the costs of your own health care, which would be paid for in the form of drafts on your MSA account. For most people, by the age of 55 or so, the account would have a value in excess of $1,000,000. Most of this money would have to remain in the account, of course, to fund for your continuing (and growing) health care costs. However, a small amount, perhaps 1% per year, could be distributed to you as supplemental retirement income. On your death, what you haven’t spent would go into your estate, perhaps subject to a special tax (if necessary) to fund the next generation’s MSA. Some people would expend all their funds (and more besides, taken from the catastrophic care policy), and die with an empty account. That’s fine, as our purpose was to provide for their health care. Most would die with at least a small surplus.

This plan has at least three benefits: First, every American would be covered, cradle to grave. Second, because we are now spending our own money, the market discipline would drive down costs. Third, the existing system of health care woud remain mostly intact. Doctors, hospitals and drug companies could charge what they decided to charge, constrained however by the fact that too high a charge will result in fewer customers.

What about the costs, and why should the government bear them? Aggregate costs would be much lower than today, owing to much higher efficiency and the fact that consumers will bargain for better prices. It pretty much has to be the government that pays, as newborns have no employer, nor do the parents of some newborns. However, both employers and individuals, free of the current high burden, should be willing to pay higher taxes (GASP! I can’t believe I said that!), particularly when their aggregate out-of-pocket costs will be lower.

As a conservative, can I justify this philosophically? Yes, I think so, although frankly, maintaining idealogical consistency is less important than solving the problem. My conservative argument is that this will save money, it will reduce government involvement (to writing a check rather than administering a program), and it puts the discipline of the marketplace to work.


Ah, gentlemen, what you have beautifully crafted is a government-endowed single payer health care system. It's a perpetual motion machine in which I'll actually get richer as I get closer to dying, if i can just avoid getting hit by a falling airplane! It has the not so subtle ring of school vouchers to it...amazingly, the premium on many basic health care policies will guessed it, $2,000. Rich people will "supplement" their MSAs and create a two-tiered health care system. There are a few bureaucratic questions as well. Who "manages" the MSAs? Who keeps me from taking my $2,000 a year and going to Hawaii? A government bureaucracy? Let's say I decide to "make my own decision" and get a shitty health care policy that doesn't cover X,Y,Z. Are you conservatives willing to let me die for my bad choice? Are you willing to say, "screw him. He had a lapse of personal responsibility, and that's why he is an alcoholic?" This plan is not inherently more efficient. It's a "free market" fig leaf on a single payer system. Higher taxes. No regulation. No cost containment.


I suspected liberals understood nothing of economics, and would resort to name-calling when their weak minds were inadequate to the challenge of responding intelligently. But I am getting old and forgetful, so it is good to be reminded, from time to time, that these suspicions have substance. Thank you, Sam. Maybe a spritz of sulphur dioxide would perk you up some.


This is why we need single-payer:

1. You pay taxes/premiums to Uncle Sam.
2. Your see your doctor.
3. Uncle Sam pays your doctor.

Three steps — it doesn't get any simpler.
See Rep. Weiner's explanation.


caheidelberger said...

Rarely am I the most concise speaker in a conversation. (And cool: I got my picture on a blog! Thanks! :-D )

MSA's: well, my daughter would have been $7000 in the hole from day one. And they wouldn't solve the problem of insurers refusing to cover people who actually get sick and try to use the service they've paid premiums for.

Forget the fig leaf: I'll take my single-payer straight up. (Commenters are welcome to unmix the metaphor.)

Bill Fleming said...

Corey, I'm thinking unmixing that particular mixed metaphor could maybe get a little spicy. ;)

[aaron] said...


so are you saying you support single-payer?


so which name that sam called you do you have a problem with, 'conservative' or 'gentleman'?


i'm with you and weiner: i have no choice as it is through my employer-provided insurance, so as long as i have no choice, i might as well rest assured that my family and friends will be insured as well.

Braden said...

Frankenfeld has an overall good-sounding proposal, but from what I can see, he doesn't address any of the concerns with his plan, such as the lack of oversight. He simply responds by stating that liberals are stupid. I fail to see how that has anything to do with the merits of his plan.

Democrats should have started off by proposing a single-payer system. Republicans' heads would have exploded, and then the compromise would have resulted in a public option.

Bill Fleming said...

Braden, Frankenfeld has elevated the insulting of us Democrats to an art form.

Most of us having once felt the sting, are willing to stand in line for hours just to receive even one more little taste.

It's like a badge of honor, you know... a sort of blessing actually.

Anonymous said...

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


Bill Fleming said...

Thanks KARMINA for the compliment and the link.

Rumor has it that some of us older fellows around the Forum may be taking the occasional hormone supplement.

I doubt any of us will develop "ovarian pain" because of it, but we may be responsible for inducing a little of it from time to time.

Anyway, I'm sure our female readers will find your link helpful. Check in anytime, Susan.

Best, BF

ThatOneGuy said...

Frakenfeld: I think your proposal is more suited to funding higher education than Health care. Costs are what they are in part because we are not provided with a list of charges before receiving care, but only afterward. Often the charges are for things we never asked for.
We were quoted $12,000 for prenatal care and delivery. Complications at the time of delivery ran that up to over $75,000. I promise I wouldn't have stopped to shop around while my wife was hemorrhaging.
I certainly would not have risked trying to get her to another hospital with a lower rate.
The controls the market can impose only work in the presence of competition. There is only competition in the non-life threatening area eg. colds, muscle strain, back pain, allergies. As soon as blood is spilled, all competition is over and market forces are a joke, even in urban settings.
We don't use market forces for some of the most important things in our lives. No privatized municipal water or sewer systems, for example. When market principals have been applied to other utilities such as electricity, Enron and %1,000 increases in charges have resulted.
Which brings us round to the question," Should Health care be a utility or a commodity or a discretionary purchase, as it presently is for me and 40 some million other Americans?"