Having read the draft of the Kennedy Plan, and having read the reports of the work in progress Baucus Plan, and having heard the intensity of the undefined Obama Plan, I thought it would be worth describing the Plan That Would Not Be. Perhaps its relegation to the scrap heap of history may be worth a quick read and in turn a memorialization in writing. We have argued elsewhere what we believe makes for a good plan but in this brief not we will take it one step further.
Having raised capital for my companies over the year as a dream merchant, namely selling ideas with some semblance of substance, I will attempt to do the same here. One of the selling techniques is to use comparables. You must bring some example of reality to the table when selling an idea for two purposes.
First, to allow the investor to have something to hang the new idea on, they can use the paradigm of a known to infuse the new with the comfort of what they understand.
Second, comparables have embodied in them some workable, hopefully, financial model and metrics. One can, using comparables, see how something works, where risks are, and understand how to extend it. Otherwise you are "shingling the roof in the fog…", and you may soon run out of roof.
So the comparable we use if auto, property and life insurance. In auto insurance we as a society insist that everyone have insurance. Why, simply if you as a driver have an accident there is an externality effect which is you may not just damage your property but also others. There is also the concept of fault and no fault. There are just accidents; neither party may be at fault. This may be the case of "black ice", suddenly appearing and causing multiple vehicle accidents. There also is fault, namely if one goes too fast or through a red light. Then you are at fault and as such your rates may go up. Thus I argue why not consider health care as we do auto insurance and see how such a system would work.
Universal Coverage: As it is with auto insurance it is necessary to have universal coverage. The reason is that there are the externalities resulting from one who is not covered and in turn has an accident. It may affect others and cost them. Thus universal is necessary.
Individually Purchased non Tax Deductable: Each person is responsible for selecting and purchasing their own insurance. In addition it is not a tax deductible item. It becomes an individual choice and an individual responsibility. This removes the pooling effect of the company purchased insurance. Thus a large pool would have a monopsony on purchase and their rates may be exceedingly low at the cost of rates for purchasers who have no purchasing power. This almost anti-trust effect of purchasing power also has externalities which disadvantage others. If we want a level playing field in health care, especially as to costs, then we must consider the important effects of buying pools.
Multiple Vendors, No Government Vendor: As we have in auto insurance the consumer has multiple options and they are competitive. Perhaps there may be the equivalent of a State Insurance Commission to regulate certain parts yet for the most part it is the free market which sets rates.
Minimum Catastrophic Coverage Requirement, Multiple Options: Catastrophic coverage is a requirement. It is akin to the minimal liability coverage in auto insurance. The difference here is that there must be some form of true complete catastrophic coverage. Namely it must cover for everyone the extreme cases which today can bankrupt those unfortunate enough to be struck by such events. However, there always will be limits. The end of life issue will always come up. Thus a vegetative coma problem is one we would always see, do we demand coverage for the life of the patient and who decides what that life is? Must there be a living will and a directive for all those with coverage? There are cultural issues which would make true catastrophic coverage vary considerably and in some cases irrationally. In addition there would be as many options as a consumer would be willing to purchase, various deductibles and coverage options.
Competitive and Comparable Rates: By having an open market and setting rates at the state by state level we would open to achieve competition. We see that for the most part people are satisfied that their auto insurance functions in a reasonable manner. The only time it does not is when state legislatures interfere with market functions.
Having raised capital for my companies over the year as a dream merchant, namely selling ideas with some semblance of substance, I will attempt to do the same here. One of the selling techniques is to use comparables. You must bring some example of reality to the table when selling an idea for two purposes.
First, to allow the investor to have something to hang the new idea on, they can use the paradigm of a known to infuse the new with the comfort of what they understand.
Second, comparables have embodied in them some workable, hopefully, financial model and metrics. One can, using comparables, see how something works, where risks are, and understand how to extend it. Otherwise you are "shingling the roof in the fog…", and you may soon run out of roof.
So the comparable we use if auto, property and life insurance. In auto insurance we as a society insist that everyone have insurance. Why, simply if you as a driver have an accident there is an externality effect which is you may not just damage your property but also others. There is also the concept of fault and no fault. There are just accidents; neither party may be at fault. This may be the case of "black ice", suddenly appearing and causing multiple vehicle accidents. There also is fault, namely if one goes too fast or through a red light. Then you are at fault and as such your rates may go up. Thus I argue why not consider health care as we do auto insurance and see how such a system would work.
Universal Coverage: As it is with auto insurance it is necessary to have universal coverage. The reason is that there are the externalities resulting from one who is not covered and in turn has an accident. It may affect others and cost them. Thus universal is necessary.
Individually Purchased non Tax Deductable: Each person is responsible for selecting and purchasing their own insurance. In addition it is not a tax deductible item. It becomes an individual choice and an individual responsibility. This removes the pooling effect of the company purchased insurance. Thus a large pool would have a monopsony on purchase and their rates may be exceedingly low at the cost of rates for purchasers who have no purchasing power. This almost anti-trust effect of purchasing power also has externalities which disadvantage others. If we want a level playing field in health care, especially as to costs, then we must consider the important effects of buying pools.
Multiple Vendors, No Government Vendor: As we have in auto insurance the consumer has multiple options and they are competitive. Perhaps there may be the equivalent of a State Insurance Commission to regulate certain parts yet for the most part it is the free market which sets rates.
Minimum Catastrophic Coverage Requirement, Multiple Options: Catastrophic coverage is a requirement. It is akin to the minimal liability coverage in auto insurance. The difference here is that there must be some form of true complete catastrophic coverage. Namely it must cover for everyone the extreme cases which today can bankrupt those unfortunate enough to be struck by such events. However, there always will be limits. The end of life issue will always come up. Thus a vegetative coma problem is one we would always see, do we demand coverage for the life of the patient and who decides what that life is? Must there be a living will and a directive for all those with coverage? There are cultural issues which would make true catastrophic coverage vary considerably and in some cases irrationally. In addition there would be as many options as a consumer would be willing to purchase, various deductibles and coverage options.
Competitive and Comparable Rates: By having an open market and setting rates at the state by state level we would open to achieve competition. We see that for the most part people are satisfied that their auto insurance functions in a reasonable manner. The only time it does not is when state legislatures interfere with market functions.
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