March 29, 2012

601 words 3 mins read

A Health Insurance Solution that Some Smart State Should Try

The term “United States” is both plural (many states united) and singular (the United States). The tag line “e pluribus unum” loses its meaning if we cease to be many, if we give up our identities as individual states. As states, we are as different from each other as the United States is from Canada.

The United States are most powerful pursuing opportunities and fixing problems in the plural but defending in the singular.

Justice Louis Brandeis called the states “laboratories” for policy experiments.

It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.

When Massachusetts experimented on itself with RomneyCare, it was behaving in complete accord with the wishes of the founders. That’s exactly what federalism means.

**For the past fifty years, though, most states have looked to Washington to pursue everyMedicine_Case__First_Aid_Case opportunity, solve every problem, and fund every initiative.** Missouri wants to change its schools, its Republican legislature begs Arne Duncan for cash—offering our sovereignty in return. (Just one example.)

If some enterprising state would like to experiment with health insurance that actually solves some problems rather than shifting responsibility to the Millennials, try this:

1. Phase out “Cadillac” plans by setting a deductible floor of $1,250 per person ($2,500 per family) per year.*2. Create a state-wide Medical Savings Account program that allows people to save unlimited amounts to cover their deductible—or any other medical related costs, including cosmetic medicine—free of state taxes.*3. Pass meaningful tort reform.   

Why This Will Work

High Deductible: By setting a minimum deductible of $1,250, people become medical consumers. That first $1,250 comes out of their pockets. They can negotiate prices with medical providers. They can put a Band-Aid® on their own damn finger. Whatever. They become totally responsible for the first $1,250 ($3,000). Plans like this cost about $200 per month with outstanding side benefits like free annual check-ups. (Find one here.) Further, an individual’s insurance is now directly tied to the insurance company, not the employer. This makes health insurance portable.

Medical Savings Account: We used to have something like this nationally, until it started working too well and threatening the whole medical-insurance-Congress money cycle. This MSA encourages people to pre-pay their medical costs. It’s convenient and leads toward responsibility for medical costs. And it’s a smart way to save up for elective procedures.

Tort Reform: Everyone except Trial Lawyers agrees that gold-digger lawsuits drive up the cost of healthcare. A recent Vanderbilt University study showed we waste $2 billion a year on orthopaedic defensive medicine, alone. Tort reform will allow doctors to order necessary tests for diagnosing and correcting the problem, not a thousand unnecessary tests to build a case for the courtroom.

Just Try It

Will this solve all of America’s medical and insurance problems? No. And there will be some pain early on. People will take time to learn personal medical responsibility. We’ve been trained to never care for our own medical consumption, and we need to relearn that skill.

But it will reduce the total cost of medicine without drying up availability. It will do this one state. If it works, other states are free to experiment.

As more and more states adopt this model, maybe the people the states send to Congress will allow cross-state insurance to increase portability.

If the Supreme Court strikes down ObamaCare, the person or party with the best solution wins. In the case of medicine—and all other opportunities—federalism offers the best hope.