Thursday, March 11, 2010

Robert Banta's idea

This morning's front page Washington Post story on health care reform is  "Obama: 'It's time to vote.'

Maybe so, but as Congress hasn't voted yet, I thought I'd pass along an interesting idea on health care reform from WMRA listener Robert Banta:
Last year President Obama asked Congress to come up with health care reform that pays for itself, encourages competition and is affordable. In the background of the debate on just how to accomplish these goals is the looming issue that, as more and more baby boomers start to retire, Medicare will be the next financial crises if it is not overhauled in this reform.
The old idea of a public option is dead on the floor of Congress. But what if there were a different kind of public option, one that paid for itself, encouraged competition and was affordable? What if every individual or family could choose to pay 8% of their taxable income, capping out at $6,000 dollars, to a government plan for whatever basic health care they needed? The option would exist to choose a private health insurance company for either more or less than 8%, more services or fewer, but the safety net of a public option for all basic health care that cost only 8% of an individual or family’s income would still exist. An 8% plan would replace Medicare, and make the services Medicare provided financially sustainable.
You may have heard the tag line from late night commercials, “but wait, there’s more.” With an 8% plan the tag line would be reversed, “but wait, there’s less.” Take a look at your pay stubs. You are already paying for a public option, whether you are eligible for Medicare or not. Medicare tax is 1.45% of every person and every business’s income. If you chose the 8% plan, you would only be paying 6.55% more than what you are already paying.
To many, 8% must seem so inexpensive as to be too good to be true. A couple months ago the PBS NewsHour did a piece on the Dutch health care reform that by all accounts is doing quite well. The average cost for health care in that country was reported to be 7% of a person’s income. The numbers for the US also seem viable for such a cost. The median household income in the US is 50,000.00 dollars per year. A family choosing the 8% plan would pay $4,000 per year. If only 1/3 of the US population, 100 Million people, used the 8% plan, there would be 400 Billion dollars per year for health care, just for those 100 Million people.
The economic benefits of an 8% plan are many. Besides being affordable, paying for itself and encouraging competition, the 8% plan is not employer based, so it goes with you. Another benefit of this plan is for businesses. In a time when businesses, especially small businesses, need a boost, not having to pay for an employee’s health care would be exactly the stimulus they need. But wait, there’s less. They would not have to pay the 1.45% Medicare tax, either.
Make no mistake; this idea is only part of the greater solution of health care reform. However, an 8% plan is vital to health care reform becoming a true reform.
Health insurance companies will have to become more efficient. They might even have to stop pouring billions of dollars into lobbying Congress to keep things the way they are.
My name is Robert Dean Banta, my idea is 8% health care and I live in Staunton, Virginia.
Any thoughts on Mr. Banta's idea? On health care reform in general? On Congress? On President Obama's handling of the issue?


  1. I like it! Unfortunately I think its missing one key thing that seems vital. Insurance companies are for-profit. That means you would be paying money to a CEO of a company, and CEOs are likely to make decisions that put money in their own pockets. This doesn't help the gov't keep the costs down. If you could make insurance companies non-profit it would make a big difference. Also I'm curious as to what kind of plan this would offer? Like a no-deductible, just co-pay plan? Or a 5,000 deductible catastrophe plan? If its not worth having, most people in the 50,000 income range wouldn't opt in. They'll pay more for a better plan, and if you only have people in a much lower tax bracket, you're not taking in the kind of revenue suggested. Overall I think its a good idea, but it needs some fine tuning.

  2. Ironically, many BCBS companies started as non-profits, but had that benefit rescinded in the mid-1980's because, primarly, they sold commercial insurance. (Gee, wonder what lobbying block was behind THAT.)

    Moreover, while I like this idea, I wonder if it will just create a perceived have/have not situation where those who couldn't afford more benefit-heavy plans wouldn't have access to non-'basic health care'. (And how would we define that in a way that makes everyone happy?)

    While I don't like the thought of paying taxes any more than the next person, the idea of making health insurance provided by employers a taxable benefit makes a lot of sense -- because, in the current market, it's not something everyone gets, so it's a fringe benefit that should be taxable. However, I would want said taxes to help underwrite a public option for those who DON'T receive that as a fringe benefit.

    I wonder how many of those federal elected officials who are screaming bloody murder over the thought of a public option either:
    --> have insurance via the government through their service on Capitol Hill; or
    --> have a parent/sibling/relative on Medicare or Medicaid.

  3. Author's clarification: to 1st comment - it is a version of a "public option" not a private one. The only 8% dollars that would pay CEO's might be for a private company (like MSPRC does with Medicare) to contract claim services. As to deductible/co-pay issue: may not need one, but I would say 1k/family max.

    to second comment: this is not an employer based plan, sorry if I did not make that clear.

    more details on

  4. This might be something to consider as a fix to the current health care package that is about to be passed. If it's not passed, there will be 15 - 20 years to sell it.

    How is this better than Medicare for all?