As was just discussed, there need to be options for the American consumer to choose in health care.

In the reformed world of free market forces, those options so far include:

1. Health insurance purchased in a market that truly competes
2. Health security through a co-op or HealthShare
3. Remain uninsured by using the formula discussed in my past post

There is another product that exists that could become 3a: Health Savings Accounts.

Currently, health savings accounts are attached to a high deductible health insurance plan. This is further evidence of the entire monopoly that insurance companies enjoy over our health care market. There are tremendous benefits to HSAs and those benefits need to passed onto more than just the insured.

Michael Cannon of the CATO Institute, in his paper, "Large Health Savings Accounts: A Step toward Tax Neutrality for Health Care," proposed making some changes to HSA's which would encourage more competition and therefore drive prices down to a competitive level. His proposals are as follows:

1. Increase HSA contribution limits dramatically. For illustrative purposes, assume the maximum annual contribution limits would be roughly tripled, from $2,850 to $8,000 for individuals and from $5,500 to $16,000 for families.

2. Remove the requirement that HSA holders be covered by a qualified high-deductible health plan. HSAs would be open to those covered by any type of insurance, as well as the uninsured.

3. Allow HSA holders to purchase health insurance, of any type and from any source, tax-free with HSA funds.

Cannon writes, "Restructuring the exclusion for employer-sponsored health benefits in this way would enable more individuals to obtain health insurance that matches their preferences, would increase efficiency in the health care sector, and could reduce inequities created by the exclusion. These changes also offer a means of limiting the currently unlimited tax exclusion for employer-sponsored health benefits that may be more politically feasible than past proposals. " He concludes: "Large HSAs could serve as a step toward a tax system that offers no preferred treatment to health expenditures, and thereby forces the health care sector to accomplish more with the resources devoted to it (Footnote 1)."

This option, tied to the one previously discussed, would create a truly viable option for the uninsured. Such an expansion of the HSA could be an additional product that would bring more competition, and therefore greater options at lower prices, to the consumer.

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Footnotes

1. http://www.bepress.com/fhep/11/2/3/

As discussed in my previous post, the market has failed to deliver options that create competition, add value and drive down prices. Reform is badly needed to restore Justice to our health care system. One reform that must be looked at is decreasing the amount of risk the uninsured have to bear.

One of the major advantages the insured have over the uninsured is that, although their premiums are astronomically high, the cost is not nearly as high as the actual cost of major health care services. Because the actual cost is so high, people purchase insurance to keep themselves financially safe in case the need arises.

Insurance companies are able to pay out billions of dollars in bonuses and profits because they are able to leverage their huge population of insured individuals against hospitals and doctors and demand, or rather force, them to accept less for the services than they would have otherwise billed.

The government with its even larger population of insured is able to do this even “better” than insurance companies. This creates some unintended consequences within the whole system. For example, a typical profit margin is 30%. If Medicare reimburses you at 60% of billed charges, you have actually lost money. The provider has to make it up somewhere. Who do they pass it on to? The insurance companies and the uninsured. This pushes up premiums and costs at an alarming rate and financially devastates those without insurance. Because of the fear of the financial loss that comes from being uninsured, people will eventually do all they can to get insurance.

Increased competition will lower costs. In addition to the other recommendations I have made, one more reform that needs to take place is a measure that places a maximum amount the uninsured can be charged for medical services. This would increase competition and provide a level of security. For example, if the original price of a service is $1,000 and the insurance company reimburses the provider $500 for the service, the uninsured should not be stuck with the full bill of $1,000. That however is exactly what is happening in most cases.

There certainly should be some advantages for having insurance. However, one of them should not an exclusive window to discounted prices.

There is no easy way to solve this problem. If you lower prices on some customers it has to be raised on others. The problem is that the uninsured are always the ones who get the worst end of the equation. It is not Just that a system which presently forbids competition and forces prices up leaves those who cannot afford insurance left in the most vulnerable situation.

So, what is the solution?

The most logical solution is that the uninsured will not pay more than 1xx% of the average reimbursement amount (or the advantage the insured enjoy) the Insurance Provider pays for a given procedure, test, or visit. It seems right to me, that the percentage should be about 120%. The exact science of this formula would have to be determined. When using this formula in the situation above, the uninsured consumer would have paid $600 instead of the full $1,000. Through health reform legislation, the differential, or $400, could become a tax deduction for the provider or even a temporary tax credit.

Even without the extra protection from the tax code change, this could still be a viable option. However, without the tax benefit, this push prices up in other areas. Nevertheless, the insured still would enjoy the advantage they expect by being insured and the market would find the appropriate balance with these safeguards in place.

With or without the tax code change, being uninsured becomes its own product. It comes with a risk but it also comes with a safeguard – or type of insurance - and possible reward based on the health of the individual. More on this topic will be discussed in my next post.

This is not the perfect solution. However, it is one solution among many that must be considered. Bringing the insured vs. the uninsured costs to a similar level creates options for the American consumer. With this kind of safeguard, the consumer has options: remain self insured or purchase health insurance. Whereas presently, the consumer doesn't truly have a choice. They are forced into one situation or another. Furthermore, this kind of provision could be one for a temporary duration of time, for example of five years, while the health care market begins to grow and take hold on free market principles. As it does, other options will be created that will provide the insurance and protection needed. For the time being however, this is a necessary change to provide justice in an unjust and perhaps even predatory system.

Choice lowers costs through increased competition and options. If we believe in health care for all and in prices that all can afford, this is something that must be debated and considered.

What is the end or purpose of Government? According to the first draftsman of our Constitution, “Justice is the end of government. It is the end of civil society. It ever has been and ever will be pursued until it be obtained, or until liberty be lost in the pursuit (Footnote 1).”

We need government and we need it to administer justice for all. Therefore, government has a place in health care. As has been plainly illustrated to a point beyond reasonable argument, that place is not in the further entrenchment of the government in taking over private industries but is rather in regulating them and seeing that the principles of Justice and Liberty are protected and strengthened – not lessoned or altogether destroyed.

An over zealous government, however, is not the only way to lose Justice and Liberty. Unfair and unbridled capitalism can be just as dangerous to justice and the liberty of the People. To protect the citizens of a Free country against the usurpation of power and undue influence by others, including corporations, government serves as the arbitrator and administrator of supposedly blind justice. These just laws bring all mankind to the level and force us to operate as equals – each having their fair chance to succeed or fail based on their own efforts, or lack thereof, and not by the unfair forces of others.

One such just law is the the Antitrust law.

In 1993, the Supreme Court ruled that the purpose of this laws is:

"not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself (Footnote 2)."

If, from this statement, Antitrust laws are instituted to protect the public from the failure of the market, can we not infer that one of the major causes of market failures is a lack of competition itself – hence the need to create and enforce such laws? Indeed we can.

And, who will not agree with the fact that the health care market has failed the consumer by not providing them with quality services at affordable prices? So, if the health care market has indeed failed us, can we not conclude that part of its failure is based on the injustice of trusts or monopolies which altogether eliminate competition and free market forces? Again, indeed we can.

The failure that has lead us to this issue has arisen from a suppression of the Free Market – not the result of a free market - and an unjust protection by government on the insurance industry.

I will explain.

As much as some would like us to believe that reforming health care is a complicated issue, the truth of the matter is that making some very basic and essential adjustments would do more for American health care than most of the changes being debated. The most basic and immediate of changes that is needed is reforming the insurance industry to increase competition. One major obstacle toward creating a competitive market in health insurance is that the insurance industry, by law, doesn't have to compete.

The Insurance Industry is one of only two that are exempt from Federal Antitrust laws. The other industry is that of Major League Baseball (how did that happen?). Again, by law, insurance companies do not actually have to compete on a fair and level ground with each other. On the contrary, they are free to fix prices, collaborate on product offerings and gather information together. How is that a free market? It isn't. Also, in such an environment how can prices be driven lower through market forces if free market forces don't even exist? The answer is they won't ever go down. On the contrary, because of the ambition and self interest of man, they will only go up.

If we want the market to succeed as it does in every other well established industry, wouldn't we want “to protect the public from the failure of the market” and institute a law against health insurance monopolies “which unfairly tends to destroy competition itself”?

We would – absolutely.

Accordingly, that is why the first, and most basic reform in creating a free market health care system that works for America, is that of repealing the Antitrust exemption health insurance companies enjoy. It is necessary. It is absolute. It is non-negotiable if we are to truly create an environment where Justice is administered and society is blessed. Only by creating an environment where companies compete for business will better service at lower costs be offered. This is the first step to that.

Both an over zealous government and unfair and unbridled capitalism are detrimental to justice and the liberty of the People. To restore Justice and Freedom to the health care industry, this is a recommendation that must be enacted.

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1.Federalist #51, James Madison
2.Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458 (Supreme Court 1993)

Some may think we are close to time travel but we can be assured that the masses don't have power to use it within the next generation or two. For if they could, they would comeback in droves and wage a revolution of their own with an all too familiar battle cry: “No taxation without Representation!”

Surprising to us however, we are the tyrants and they are ones we have put in chains. How? Deficit spending and our national debt are exactly that – taxing those without a voice in our political process, the unborn that is, and laying the burden upon their shoulders.

Chief Justice John Marshall wrote in 1819, “The power to tax is the power to destroy (Footnote 1).” It certainly is a power that, when misused, can lead to a destruction of economy, prosperity, growth, and liberty. It is also a power that when properly wielded provides for efficient government, enforcement of the law, protection of our citizens, and support for the prosperity of the people.

Because it is a double edged sword, and because it is the people's money that must be collected, the power of taxation can only be justly employed when it is by representation of the people who must be taxed.

If you and I are represented by our Congressmen who serve us for the duration of their term, who is it that represents those who are not yet even alive? By the law of representation, no one can.

If we believe that representation is the only just way to regulate taxation, burdening the unborn and unrepresented with the expenses of today is unjust and immoral.

Debt is bondage. Anyone who has had debt knows the truth of this saying. To be in bondage as a result of our own choice is one thing. To be in bondage for the choices of the dead is entirely different and infinitely more cruel. It is a form of slavery, taxation and redistribution of wealth to which they will see and receive almost no benefit (Footnote 2).

It is simply wrong to ask future generations to pay for our education, our wars, our freedom, our cash for clunkers, and our welfare entitlements. There is no way around it. It is simply wrong and unjust. The unborn are not the recipients of the benefits of these policies, entitlements, programs and wars. Alonzo Fyfe put it this way:

“The National Deficit is the redistribution of wealth – the value of the slave labor – that is to be taken from those who have no political voice to be handed out to those whose votes the politician wants to buy.

It is no different than imposing a tax that is imposed only on those who are black, then using that money to write checks that are distributed to white people (Footnote 3).”

Certainly there are some rare exceptions to when this would be just. However, those exceptions are rare and involve in no way entitlements for the living today.

As has been shown in several of these short essays, the true costs of health care reform placed on the American taxpayer are not even fully known but surely far exceed those being projected. Current unfunded liabilities for Medicare are already $74 trillion (footnote 4). Currently, the house version of the health care reform bill has over $13 trillion of unfunded liabilities (footnote 5). As much as I agree with the President that health care reform should be deficit neutral, the fact of the matter is, it won't be. Among so many other things, the government's management of Medicare is proof of this.

Paying for our health care is our responsibility. We cannot argue with this. We cannot put our children and grandchildren in bondage for our benefit today.

If we create a bondage for those who cannot be represented in the process, and redistribute their wealth even before they are born and have a chance to acquire it, it is the truest form of taxation without representation and the greatest form of tyranny and oppression.

If We the People, through our representatives desire this kind of health care reform, then so be it as long as we, and only we, are the ones who pay for it. If we make this choice, then we must live with the consequences – not the unborn and those who have no voice in our system, those whose futures should be their own, and not ours, to decide.

Our beautiful National Anthem contains these solemn words:

“Oh, say does that star-spangled banner yet wave

O'er the land of the free and the home of the brave?”

It may yet wave, but for the unborn they are not free. And for us, if we fail to do the right thing and not take responsibility for our freedoms and privileges by paying for them in our own time, then no longer can America be called the home of the brave - as Bravery is to do the right thing in the face of difficulty and opposition. Bravery is to sacrifice. Bravery is to seek the truth and to live by it. Let us be Brave and keep ourselves, our children and our grandchildren Free.

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Footnotes

1. http://www.bartleby.com/73/1798.html

2. http://chestofbooks.com/finance/Amasa-Walker/The-Science-of-Wealth/Fallacies-Respecting-A-National-Debt-Part-3.html

3. http://atheistethicist.blogspot.com/2009/06/sad-fate-of-future-generations.html

4. http://online.wsj.com/article/SB120373015283387491.html

5. http://www.cato.org/pub_display.php?pub_id=10422

“I've also pledged that health insurance reform will not add to our deficit over the next decade, and I mean it...

President Obama July 22, 2009 (Footnote 1)

I believe this is a laudable and praiseworthy goal and I hope it is true. However, in what reasons, assurances and truth do I have to hope?

The American people have no basis upon which to believe anything from Washington D.C. when spending money is concerned. If you need proof of that, as of the moment this post was being written, our National Debt was $11,889,652,785. What does that look like? According to CNBC.com, “If denominated in $1 bills, the cash would stack as high as the tallest building in the world, the 2,683.7 foot Burj Dubai skyscraper… 1,474,918 times. At this height, it would create a block of bills with a base approximately twice the size of the Empire State Building's, which is just under the size of three American football fields.

If consolidated into a single stack of $1 bills, it would measure about 749,666 miles, which is enough to reach from the earth to the moon twice (at perigee), with a few billion dollars left to spare... It is also interesting to note that this number is approximately 13 times the amount of US currency in circulation, according to the Treasury bulletin, which lists the amount at $853.6 billion as of December 31, 2008 (Footnote 2).”

If you need further proof, think of the Iraq War, Medicare, Medicare Part D, and the War in Afghanistan. Almost all of this debt is from former administrations and we cannot blame the current president for past errors. Our national debt and recent events however show a long train of abuses when it comes to the public purse. Even now, President Obama continues to fund our wars in Afghanistan and Iraq through supplemental bills just as President Bush did so he can say how his budget cuts the deficit when it really doesn't. Four weeks ago he touted on Prime Time TV how he had cut the deficit by $2,200,000,000,000 (Footnote 1). Yesterday the White House announced that they had reduced it by only $200,000,000,000 (Footnote 3). That is a two trillion dollar error in a matter of weeks.

The President said, “I'm not going to sign a bill that, for example, adds to our deficit.” However, this year the Federal Government has spent $1,580,000,000 that it didn't have (Footnote 3). Granted, a lot of that was emergency spending for things that many believe may help our economy in the short term. However, not all of it has been helpful and some would argue that none of it was necessary or helpful - including the non-partisan congressional budget office (Footnote 4).

So, on what grounds do we have to believe the current President's projections for how much health care reform will cost? We have no such grounds. Those who do believe the government's projections are disregarding not just history, but the present reality.

If we can't trust the cost projections, how can we trust the President when he says “health care reform is not going to add to that deficit”?

Reality has proven to us that costs are always higher than they tell us. The president tells us that health care reform will cost $1,000,000,000,000 over the next 10 years (Footnote 5). Is that all? Some project health care reform to be $8 trillion over 10 years…60% as large as our current national debt (Footnote 6). Even the current house bill has a projected budget shortfall of $13,600,000,000,000 (Footnote 7) – far more than the $1 Trillion being discussed. According a Walt Street Journal article last year, Medicare alone has an unfunded liability of $74,000,000,000,000 (Footnote 8). How will all of this be paid for? It will be paid for by deficit spending – that is, taxing the unborn to pay for expenses today.

The fact of the matter is, they are not being honest with us regarding the costs of the bill in an effort to pass it. This will cost much, much more then they are telling us because a) it always does, and b) government programs always expand over time. We have to account for this.

To not be honest about the costs and what this means for us in the near and long term is irresponsible and misleading at best, reckless and dishonest at worst. In either case, it is a far cry from good government and representative democracy.

The right way to do this would be to be open and honest about the costs and the reality of what it will take to pay for it. But we're dreaming if we think that will happen...

The president and those who are pushing for this change and trying to sell it with these cost projections are peddling dreams – not reality. And even worse, their dreams will become our financial and economic nightmare in the not too distant future as the public becomes straddled with the true costs of government health care reform and are forced at all levels and in more than one way to pay for it.

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Footnotes

1. http://voices.washingtonpost.com/44/2009/07/22/transcript_of_obama_prime-time.html

2. http://www.cnbc.com/id/30108264/?slide=12

3. http://www.reuters.com/article/newsOne/idUSTRE57K4XE20090821

4. http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

5. http://moneywatch.bnet.com/economic-news/article/health-care-reform-what-it-will-cost-you/330206/

6. Health Reform 2009: Watershed or Waterloo? A Lockton Benefit Group Webcast

7. http://www.cato.org/pub_display.php?pub_id=10422

8. http://online.wsj.com/article/SB120373015283387491.html