Wednesday, September 16, 2009

Ned Studholme's chimes in . . .

Note: Ned sent this to me in an e-mail and I found it an interesting addition to the health care debate. Several of you have let me know that you've had trouble posting comments, so I wanted to say that if that happens, you're welcome to send comments directly to me at and I'd be happy to post them for you.

Ned Studholme's way to reform health care: I would like to suggest a compromise insurance based program that is likely to meet the requirements of both sides of the health care debate. This compromise is based on the simple notion that it is appropriate for the federal government to initiate and operate programs that manage the types of .risk that can have a catastrophic effects on individual citizens. Within our domestic health care industry, this is addressed as major medical and/or catastrophic health insurance.

Because this type of insurance involves covering the costs of extremely expensive medical events that have a very low risk of occurring, premiums are high and the benefits of coverage are rarely enjoyed by the consumer. The suggested compromise involves full participation of the federal government in this, and only this, segment of the market. The entire remainder of the health care insurance market would be left to the private sector.

The federal program would simply cover all medical and Rx costs for every citizen that exceed 20% of annual income, using the definitions of households and dependents in the existing tax code. In this manner, a family with an income of $100,000 per year would be covered for everything over $20,000 per year, and a family earning $30,000 would have a $6000 medical ceiling.

Any additional insurance would be up to the individual. If insurance from the private sector is desired, the premiums would be driven down sharply because the required coverage would be truncated where the federal coverage takes over.

Savings to the consumer would accrue from the lower cost of private insurance, and to the taxpayer because Medicare rates would apply to all of the federal coverage. The biggest savings would come from the fact that the federal government would be taking on no more risk than the private sector does today, but would not need to charge a premium
for that risk.

In addition, no new federal entity would need to be created to manage the program, as it would become part of the normal private sector practice to determine eligibility and to forward the bills when the ceiling was reached.

Finally, the costs to the consumer and/or taxpayer can be fine tuned simply by sliding the suggested 20% ceiling up or down to define the risk limits falling into the private sector market.

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