How to provide health insurance seems to be one of the biggest boondoggles ever. For one thing, insurance is needed to pay for medical services while at the same time it significantly adds to the cost of health care. Also, governments and/or insurance companies presiding over what procedures can and cannot be utilized renders a doctor's best judgments invalid, which defeats the whole purpose of health care.
Now, there are certain objectives that any health care system must address. These include bringing down costs, incentives for pursuing healthful lifestyles, universal coverage and having medical treatments decided solely by doctor and patient.
The way to achieve those goals would be to have health insurance and medical bills administered by a special branch of the banking system. An independent not-for-profit financial institution, to handle medical savings accounts for individuals and families. A Medical Savings Bank.
There would be no government involvement (except perhaps for oversight) and no health insurance companies.
Maintaining a medical savings account with one’s Medical Savings Bank MSB would be the only way for anyone to be insured. Checks and/or debit cards issued by the bank would be the only way to pay one’s medical bills. Restricting payment in this way ensures everyone’s participation. A low minimum weekly deposit would allow for those with lower incomes to participate.
Interest would be earned on each and every medical savings account as the MSB would make prudent investments and in that sense operate as any other bank. However, being a not-for-profit institution its profits would be used mostly to supplement the insurance pool. Staff and management of the bank would receive relatively modest salaries.
Now, the population of the US is over 300 million. So, with full participation by every adult and those with children providing an account for each child the amount of deposits would be enormous. Average deposits of, say, $100 a week would amount to over 1.5 trillion dollars every year. That plus interest earned from the bank’s investments would amount to a considerable pool of money. Also, interest earned for individual accounts could be higher than commercial banks could offer and serve as an incentive for individuals to maximize their deposits. Account holders with sizable deposits could make withdrawals, up to a certain percentage, to use their money for other purposes.
Individuals would be responsible for paying their own medical bills but they would also be backed up by the bank if necessary. For instance, let's say I have $10,000 in my account and I have a medical procedure costing $20,000. So, $10,000 would be charged to my account and the other $10,000 is paid by the bank as a loan. So, my account is now overdrawn by $10,000. Now, let's say the bank forgives half of the loan and I pay off the remaining $5,000. I’d pay it off by making my usual weekly deposits. Say, $60 a week. If over the next ten years i have no major expenses I would have $30,200 plus interest. So, deducting the loan, my account would actually be around $25,000.
Such a self-pay system would:
• Keep decisions about medical treatment between doctor and patient
• Provide incentive for people to pursue healthier lifestyles than is now the case
• Bring down demand for health care and lessen the cost
• Reduce operating expenses for doctors. Administrative costs would be a lot less for not having to field all the various health plans
presently in place.
• Make it so that the cost for health care would be market driven and much more affordable.
• Eliminate the cost of waste, fraud, and abuse
Now, although the MSB would cover a portion of the debt incurred by some account holders, individual depositors would not be charged for anyone else's expenses. Whatever debts the "bank" would cover would be furnished from the general pool. Like any bank one's deposits are not kept in a drawer with one's name on it, everyone's money is used for bank business while individual savings and checking accounts show the full amount deposited along with any interest earned.
This would be a system where everyone contributes and everyone benefits. The rich, with sizable accounts, could be earning a hefty interest while the poor could be generously subsidized.
Another benefit of this system would be to the economy whereas businesses would no longer be paying for employees’ health insurance plans. This would free up a lot of money that could be used to invigorate the economy and produce more jobs with generous salaries.
I have been shopping this idea around for years. It's been mostly ignored but some have tried unsuccessfully to challenge it.
Recently I've become aware of a similar health insurance program called Medishare.
Comments, questions, suggestions and challenges are welcome.