1. Catastrophic Single-Payer; Mandatory Routine Visits

Just like car insurance is for car wrecks, mandatory health insurance should only be for unforeseen health emergencies” and pregnancies for low income individuals (because it is definitely in the public interest to ensure healthy pregnancies), not for regular check-ups or dental visits, vision exams or minor health problems (main idea adopted from Jon Ogden & Bentivegna JF). If an insurance were to cover minor expenses such as these, the market forces acting upon the end consumer (namely co-payments) would be sufficiently diluted so as not to be an effective force protecting against the wasteful utilization of these services. On the other hand, to guard against many people’s natural tendency to delay regular check-ups or dental visits or treatment of minor health problems in order to save money (but risk an increased rate of “unforeseen health emergencies” in the future), the government (preferably state, but could be federal) should mandate that periodic check-ups and dental visits occur, for example, a minimum of about once a year. (Certain minimum required parameters of measurements and testing would obviously need to be defined as to what would constitute a ‘check-up’ to prevent the evolution of ever more minimum standards.)

Therefore, this type of catastrophic single-payer healthcare program would require a high deductible, perhaps $4,000 for each individual. To prevent the flood of demand from individuals who have reached their deductible, this insurance should be designed to cover a progressively higher percentage of these higher marginal costs. For example, covered costs up to $4,000 would be covered at 100%. (Remember, these covered costs only are for ‘catastrophic’ expenses, not for regular doctor visits, etc. Though these would be required services, they would need to be paid out-of-pocket.) For each dollar of expenditure above $4,000, a progressively higher percent would be covered by this insurance. So that at a total annual expenditure level of $8,000, 25% of the last $4,000 of services purchased for that calendar year would be paid by the insurance. At a total annual expenditure level of $12,000, 50% of the last $8,000 of services purchased would be covered. At an expenditure level of $16,000, 75% of the last $12,000 would be covered, while an expenditure level of $20,000 and above 90% would be covered. Expenses beyond $20,000 would be covered at higher rates, maybe even at 100% at some point, like at $100,000. The ultimate percentage rate of coverage rises for each additional dollar amount spent during a year. So if only $4,160 were spent, the insurance would cover only the $160 portion that exceeded the annual deductible. But since coverage at $4,000 is 0% and coverage at $8,000 is 25% (of the amount above the first $4,000 spent), the actual coverage amount for the $160 amount would be 1%, or $1.60.

Pregnancies, although not an ‘unforeseen health emergency’, should be covered by this type of insurance due to the great potential future public benefits and cost savings that result from ensuring adequate prenatal care, monitoring and a healthy birthing environment. The cost of prenatal care, childbirth, etc, could be distributed between the mother’s and newborn child’s insurance accounts (only for expenses accruing before birth). This means that the parents could decided how much of the bill to ascribe to each person’s medical account. This way, they could take advantage of the increasing coverage at an individual’s higher expenditure levels as proposed in this insurance plan. For example, an average birth costs around $16,000, excluding prenatal care costs. Under this proposal, $9,000 would be paid by the insurance, while the family would need to pay $7,000. As the cumulative total costs for that calendar year increases, the family’s share of such costs decrease.

The easiest way, perhaps, for such reimbursements to occur may be at the point of sale. People who pay for their medical care would, at the point of sale, have their medical account accessed in real time, showing the up-to-the-minute billing history. Computers would quickly know where the individual is in relation to total annual spending, and would quickly subtract whatever percentage of costs this health insurance is liable for and determine the amount the patient must pay. Any over billing or discrepancies could be adjusted later. Disputes about whether medical services were needed could also be resolved after the fact. To reduce such confusion or complication, all medical goods and service providers would be pre-approved by the government and would be expected to use good judgement when rendering goods and services. Perhaps over-the-counter goods and services would be exempt from this insurance coverage and only qualified professional referrals for any good or service purchases should be covered. This way, many dubious purchases would not need to be reviewed (or covered) by this government insurance.

The cheapest catastrophic health insurance (on average) any society could get would be one in which everyone pays into and everyone draws from the same pool for all their catastrophic healthcare needs (a single-payer system). The reasons for this are partly due to the massive administrative simplification of the whole process, and largely due to the increased number of people enrolled into the system (namely everyone). But it is also due to the fact that preventive care (when targeted and evidence-based) is cheaper than treating a disease or responding to it later in its development. Catastrophically insuring the currently uninsured or under-insured segments of the population that tend to use the more expensive emergency services (emergency rooms, ambulances, etc.) for relatively minor issues, and mandating that they get regular check-ups would result in more regular doctor visits and the utilization of other services and measures of prevention.

In a multi-payer system, such as our current one, different providers create different policies that cover different needs, resulting in consumers naturally opting out of purchasing coverage that they have a very low likelihood of needing. Thus, at least a portion of the insured universe (generally the healthier individuals) would purchase tailored insurance, resulting in the generation of less revenues from this segment of the population that would otherwise have been used to subsidized the less healthy segments. Thus, these less healthy, higher risk segments would either purchase insurance for themselves at a higher rate or not purchase insurance at all.  These higher premiums and lower purchase rates tend to negatively feed off of each other, significantly reducing the number of people insured.

Adding together the total costs of healthcare per capita for insured individuals (administrative expenses, preventive care, emergency care, insurance premiums, out-of-pocket costs, etc.), the total healthcare costs under a catastrophic single-payer system which require out-of-pocket expenditures for routine medical visits would be lower (assuming similar services for comparison) than the total healthcare costs under our current multi-payer system.

A catastrophic single-payer health insurance system with a high deductible (and into which all healthcare-related expenses for an individual are included) and mandatory routine medical visits would appear to be the best system to ensure adequate medical coverage for all people at the lowest prices, while sufficiently maintaining the positive influence of market forces and the freedom of people to choose their own healthcare providers.

If so desired, individuals could then purchase insurance in the private market to cover the portion of expenses that would not be covered under this proposed catastrophic single-payer health insurance plan.

Vision & Dental Included

Vision and dental insurances should not need to be separately purchased. At least minimum levels of coverage should automatically be included. The eyes and teeth are part of the body, and people purchase health insurance for body problems and maintenance, so it doesn’t make sense to place the eyes and teeth in a separate category.

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