This commentary builds on yesterday’s piece (part 1) and looks at some ideas that can reduce total healthcare costs, while providing essential coverage.

Today’s consumers are saddled with a $2.6 trillion health care system that we pay for directly in “out of pocket” installments, indirectly in current taxes and indirectly in future taxes that repay government borrowing for current needs.  The system is unaffordable and cost cutting must precede expanding coverage or new classes of beneficiaries.

The proposed cost-cutting ideas that follow are part of an integrated system that provides consumers with coverage for essential services including some that ACA omitted.

Who’s covered?  In the proposed system, most consumers will choose a health care policy from competing insurers and those policies will be paid for by the consumer or by the consumer’s employer – just as occurs today.  Some consumers will avoid insurance and pay practitioners directly.  Some beneficiaries (e.g. Medicare, Medicaid, or VA) will receive government-paid care.  In the proposed system, the government pays for its beneficiaries insurance bought from private insurers or the government may provide them with medical services directly (as does the VA).

In the proposed system, insurance coverage and who pays are similar to today’s arrangements, but costs are lowered through changes to:  the services covered, copays, health records, government cost-shifting, malpractice costs, drug pricing, and risk-based policy pricing.

In the proposed system, ideally, all consumers would sign up directly or their employer would pay for an insurer’s coverage policy.  An individual can sign up with an insurer from any state.  In some cases government will pay for health coverage.

Members of a family would be eligible individually for basic or basic and extended coverage. There is no “family price” per se.  A family could have parents and one child in the standard risk category and one child in the higher risk category.  Since pricing is per individual, the age of children in the parent’s home is irrelevant, all policies are individual policies.

In the proposed system, those who sign up for health care only after a skiing accident or car wreck (treat as pre-existing condition) are eligible for basic coverage, but if a new signup was not covered by a basic health policy for 91 of the last 180 days, then the minimum signup commitment is 4 years.  This open-entry makes for portable coverage in that anyone can sign up for a basic policy anytime, most preferentially within a few months of dropping coverage elsewhere.   Extended coverage policies are available to anyone who meets the underwriting requirements of the insurer.  A newly motivated skiing victim would make a terrible cost burden for any extended coverage carrier and may be deemed ineligible.

A few lobbyists want health coverage offered for 11 million illegal residents at the public’s expense, but coverage for illegals should require explicit prior approval by a majority of state voters.  The federal government should limit itself to providing basic coverage and only for those American residents as authorized in federal statutes – no new entitlements.

The federal government made longstanding commitments for health care coverage to armed forces veterans, social security tax payers and their dependents, and to those incarcerated.  Recently bureaucrats have extended health coverage to many others, often through games such making a political choice of where poverty “starts.”  While politicians may get a thrill from minting new classes of entitlement among potential voters, other people’s money and patience is now officially depleted.  So a hard edged moratorium is needed – no more additional commitments of federal government-paid health coverage.  Where federal government-paid coverage is in place, it should be set at the basic coverage level.  Congress, not politically appointed bureaucrats, must be in charge of and on the record for “where poverty starts”.

Everyone can be covered, especially if they pay the health policy premium.  This proposal treats everyone as an individual, allowing basic coverage to those with pre-existing conditions; limiting federal Government-paid coverage to Medicare, Medicaid, and VA beneficiaries, and to those that the voters authorize.  In the next part, the service coverage is proposed.

Alan Daley is a retired businessman living in Colorado who follows public policy from a consumer’s perspective.