Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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SECTION FOUR: New Health Savings Accounts
The project combines several concepts developed in other chapters, but is ready to be considered as a whole.

New HSA: One Potential Solution, Several Unsolved Issues.(2014 Version)

Could a health plan stand alone, without including working-age (21-66) participation? The answer is probably negative, because the demographics are: age 21-66 supplies nearly all the money for the rest to use, when they have sickness expenses of their own to worry about. Under present circumstances, the non-working subgroup could not include subsidized costs without coordinating with Obamacare, which might now contain as much as half of healthcare costs. And as the Obamacare program evidently did, we came to recognize the thirty million uninsured have such unique needs, they are probably unsuitable for any "one size fits all" solution. Probably only a demonstration project could finally establish a final answer, but even that would take decades. Politicians are not likely to commit such huge resources without more likelihood of success.

Since these conclusions could have been reached without much study, it seems a pity they were not given more consideration before implying universal coverage would be an outcome of the Affordable Care Act. For one thing, the numbers are too large. There are about thirty million Americans who are unsuitable for anything but a subsidized program, if you only include the mentally and physically handicapped, prisoners in custody, and illegal immigrants. Since there is already an imbalance between the working well and the non-working sick, thirty million extra are just going to unbalance things more. The finances of Medicare are perhaps even more precarious than for the employed population, but there is too much public goodwill for Medicare to permit much experimentation. Decades of concealing these deficits are now returning to haunt the prospect of fixing them by any imaginable cross-subsidy.

Nevertheless, this book is a product of examining each step of the American health financing system. It may have missed some things, but it tried to be systematic. Although the attempt was made to cobble together a program for everybody omitted from the Affordable Care Act, we eventually gave up the effort as unachievable. Students of health economics may find our reasoning to be of some interest, so the essential remnants are printed in this chapter.

But one idea did emerge from this effort, which is put to work in the final synthesis in the last chapter. If it is workable, it might unravel the knotted mess of the rest of the system. Financing the health costs of children blocks any one-size-fits all system, pretty stubbornly, and to a greater degree than most of us realized. Some students solve the problem by dismissing its costs as trivial. They are not. Health care costs up to the 21st birthday are said by CMS to be 8% of the total lifetime costs. Since prefunding is impossible, and the legally responsible parents have precarious expenses themselves as a group, attempts are made to create family insurance plans. But since one of the two breadwinners is often impaired by the process, half of the revenue source may abruptly appear or disappear. There is a trend toward small families, but respectful provision must be made for big ones, too. With unstable family structures getting more common, and essential rights and freedoms involved, no one is really proud of the present finance designs. When you potentially start with a $27,000 deficit for every new entrant into the employment pool, there isn't much room for innovation. Nevertheless, we developed a proposal for dealing with this problem. It's at least good enough to display in public as something which will work financially, if the public can tolerate it within its social structure. I anxiously await public commentary.

In summary, it welcomes living, breathing grandparents back into the family structure. The great difference in generational ages is employed as a source of extra years for compound interest to work. The cost is presently evenly balanced between generations: one grandchild per grandparent. Because of the long period of compounding, the overall cost is less than $100 per child, not counting any net revenue from present funding sources. It thus seems fairly safe to assume it becomes self-supporting in the very long run. Even the transition costs seem containable to the age group 40-66 at about $600 total per person over three years. It would be a godsend and a bargain, if it can withstand criticism. And by lightening the family's load at a crucial moment, it might make feasible a really radical readjustment of healthcare finance. That one can be found in the very last section of the book. It's a composite of ideas, all of which are enlarged upon in different sections of the book. And even I did not anticipate where it would come out.

 

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