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Old Today, 06:18 AM
 
Location: The Driftless Area, WI
3,292 posts, read 1,282,943 times
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When they were debating the "healthcare crisis" a few yrs ago, I got to thinking about ways to deal with it....Now, keep in mind that the Prime Directive of the Bureaucracy is to never solve a problem. Once it's solved, we have no need for the bureaucrat. No further need to discuss the ACA here.


Had they actually wanted to provide good healthcare financing, they could have come up with this:


At birth, each baby is taxed $20/month thru age 18 (appropriate subsidies for the indigent, of course-- assuming we still want to encourage large families)…..That money would be invested in an a personal account tied to, Eg, The Dow. Money could only be withdrawn to cover medical expenses.


Now the Dow has returned an average of 5.5% annually since its inception well over a century ago. Sure, it's had its rough runs, but always bounces back. (..and if we ever get to the point where it doesn't, then you've got a lot bigger problems in this country than how you're gunna pay for your next Botox injection.)


For easier arithmetic, a 5% return pencils out to an account value of~$450,000 at age 45 and over $2.5 million at age 65. With that, you could transplant your heart a few times and still have over a million left. That residual at time of death could be bequeathed to your heirs.


To institute this program, there would have to be a transition period, of course, to cover needs of those too old to have been covered by the program-- a phase out of Medicare and such; probably other details I'm ignoring.


My real question here is-- what am I missing? How would the increased, mandatory demand for the mutual fund shares impact the market? After just 1 or 2 generations, with the inherited residuals, everyone will essentially have become millionaires. How will that effect inflation? What are the unintended, unforeseen consequences of such a program?


….or ??
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Old Today, 07:13 AM
 
Location: Western Washington
9,849 posts, read 9,026,509 times
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The big thing you are missing is math.

A $20 monthly investment at 5% annually, assuming you reinvest interest and never take anything out, comes to $40,244 by age 45, which is a difference of $210,000 from your statement. At 65, that same $20/month investment only grows to $115,000, your calculations are wrong by about $2.4 million.

This assumes that the $20/month contribution continues throughout life, although you seem to imply it ends at 18. If you did really intend to end the contributions at 18, the accrued balances would be smaller than I calculated.

You do not take inflation into account, where that future $115,000 will not have the same purchasing power as $115,000 does now.

The final flaw that I see is that you don’t seem to take into account the need to spend money on health matters periodically through life, so people would be drawing down their health account balances prior to 65.
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Old Today, 09:03 AM
 
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The assumed return lags historical MEASURED healthcare inflation. Also, healthcare costs are higher for infants and early childhood. The number you quote is not even 10 percent of annual cost of providing healthcare for a baby.
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Old Today, 10:00 AM
 
Location: The Driftless Area, WI
3,292 posts, read 1,282,943 times
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Quote:
Originally Posted by fishbrains View Post
The big thing you are missing is math.

A $20 monthly investment at 5% annually, assuming you reinvest interest and never take anything out, comes to $40,244 by age 45, which is a difference of $210,000 from your statement. At 65, that same $20/month investment only grows to $115,000, your calculations are wrong by about $2.4 million.

This assumes that the $20/month contribution continues throughout life, although you seem to imply it ends at 18. If you did really intend to end the contributions at 18, the accrued balances would be smaller than I calculated.

You do not take inflation into account, where that future $115,000 will not have the same purchasing power as $115,000 does now.

The final flaw that I see is that you don’t seem to take into account the need to spend money on health matters periodically through life, so people would be drawing down their health account balances prior to 65.

OH, awright. So I was off by an order of magnitude. That's usually close enough for govt work. Actually, your calc is about twice too high too.


According to this site https://www.thecalculatorsite.com/fi...calculator.php


$20 contributed @ 5%/yr for a full 65 yrs comes out to $113,000 at age 65. If you let that ride for another 5 yrs it grows to 144,000.


For perspective, a CABG surgery average cost ~$75,000, and the "average person" only spends 3 days in the hospital in their lives.


With this relatively affordable contribution of $240/yr, conventional insurance (if we return to the "you get what you pay for" system) could be added as a supplement for another low monthly premium, if so desired....By keeping decision making based on out-of-pocket expenses, we would decrease demand. When someone else is paying, we tend to unnecessarily use services, increasing total costs.


This would still be better than what we have now.
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Old Today, 10:31 AM
 
Location: Western Washington
9,849 posts, read 9,026,509 times
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Quote:
Originally Posted by guidoLaMoto View Post
OH, awright. So I was off by an order of magnitude. That's usually close enough for govt work. Actually, your calc is about twice too high too.


According to this site https://www.thecalculatorsite.com/fi...calculator.php


$20 contributed @ 5%/yr for a full 65 yrs comes out to $113,000 at age 65. If you let that ride for another 5 yrs it grows to 144,000.
I came up with $115,000 at 65, and it may have had to do with some assumptions on the interest rate, such as 5% being calculated at the beginning of the year, end of the year, or over the course of the year by month. Regardless, $115,000 at 65 is not even close to enough to cover health care costs for the vast majority of people.

Quote:
For perspective, a CABG surgery average cost ~$75,000, and the "average person" only spends 3 days in the hospital in their lives.
That is one example of one surgery. A broken bone can cost $2,500-$35,000, delivering a baby costs $12,000 or so, cataract surgery costs $5,000-$10,000, chemotherapy costs thousands/month, dialysis is greater than $50,000 a year. Get into a car accident that requires a few different surgeries and hospitalization, and that could be hundreds of thousands.

I am also pretty suspicious of the 3 day lifetime hospital stay. It seems to me that most people spend more time that that over a lifetime.

Overall, your plan seriously underfunds healthcare, and relies on people only needing healthcare after 65. The reality is that people who receive medical attention throughout their lives live longer than those who only seek acute treatment for serious ailments.

Quote:
With this relatively affordable contribution of $240/yr, conventional insurance (if we return to the "you get what you pay for" system) could be added as a supplement for another low monthly premium, if so desired....By keeping decision making based on out-of-pocket expenses, we would decrease demand. When someone else is paying, we tend to unnecessarily use services, increasing total costs.
I will agree that out system could be changed in order to gain economic efficiency. Any country (Canada, European Union, Japan, Australia) with full socialized medicine pays less per person and receives better results.

Quote:
This would still be better than what we have now.
Not really sure about that. Your system essentially sentences anybody young to death if they have a serious medical condition. Insurance is about spreading the risk so that for a relatively nominal fee everybody is protected
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Old Today, 04:44 PM
 
Location: Ohio
21,007 posts, read 14,867,631 times
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Quote:
Originally Posted by guidoLaMoto View Post
My real question here is-- what am I missing?
Everything.

First, you have absolutely zero understanding of how your healthcare system evolved since its inception in 1926.

Because you fail to understand how your healthcare system evolved, you can never offer a viable solution.

As an example, your car doesn't work, but instead of taking the time to find out why your car doesn't work, you engage in a series totally useless worthless exercises, taking the car to Maaco or Earl Schribe and having it painted different colors and replacing the tires and trying different grades of gasoline and different air fresheners and cleaning the windshield, and yet the car still doesn't work.

Instead of doing stupid stuff and wasting a lot of time and money, you could have simply taken the car to a mechanic to have it examined and then actually fixed the problem.

Your healthcare system is the way it is due to a series of grotesque errors made by your State and federal governments at the behest of a lobbying group, namely the American Hospital Association.

So, let's start at the beginning in the hopes that you might understand.

It's 1926. There are two groups whose healthcare philosophies are diametrically opposed:

1) The American Medical Association (AMA) who believes that doctors should be totally free and independent and that patients should be charged based on a sliding-scale fee system (related to the patient's income).

2) The American Hospital Association (AHA) who believes that every doctor should be employed and controlled by a hospital and that all patients are charged the same fees.


At present, the AHA is hell-bent on making every doctor in the USA a hospital employee.


You should be very, very concerned.


An independent doctor is totally free to recommend the best hospital to perform the medical procedure you need. You are free to accept or reject your doctor's recommendation.


If doctors are hospital employees, then they are not free to recommend to you the best hospital to perform your procedure, since they are beholden to the hospital that is their employer.


Yeah, how about that?


80% of hospitals in the US are AHA member-hospitals, while 20% are AMA member-hospitals.

In 1926, an AHA member-hospital at Baylor University began offering health insurance to public and private school teachers in Dallas County, Texas, in addition to employees of Baylor University.

Insurance companies did not offer health insurance and would not for another 20 years.

"...the opportunities for fraud [in health insurance] upset all statistical calculations ... Health and sickness are vague terms open to endless construction. Death is clearly defined, but to say what shall constitute such loss of health as will justify insurance compensation is no easy task."

Source: Insurance Monitor July 1919, vol. 67(7), page 38


Over the course of the next several years, AHA member-hospitals around the US, as well as AMA member-hospitals, began offering health insurance.

Then came the Great Depression.

States are cash-strapped for revenues and they start eyeing these hospital-issued insurance plans.

Insurance is regulated exclusively by the States and not the federal government, because it is intra-State commerce and not Interstate Commerce.

Each State sets its own insurance regulations, so regulations vary from State-to-State.

Why? Because people were selling worthless insurance policies. People would sell $Millions in life insurance policies, collect the premiums, then use the premiums to fund their lavish life-styles. When the policy-holder died, they would say, "Oh, sorry, we can't pay, because we don't have the money."

States stepped in to regulate insurance to prevent fraud and abuse.

States require insurance companies to keep 8% to 35% of the total value of the policies sold as cold hard cash, another percent as assets that can be readily liquefied and the remainder as hard assets.

It's 1934. How is it possible a hospital that sold $1 Million in health insurance polices is going to be able to keep $300,000 cash on hand?

That would be impossible.

For that reason, the AHA embarked on the US World Lobbying Tour.

The AHA lobbied all the States (there were only 48 at the time) to exempt it from all insurance regulations.

Those laws are known as "enabling laws" because they enabled hospitals to skirt and avoid insurance regulation.

Those laws, or separate laws enacted later by the lobbying efforts of the AHA, allowed hospitals to operate as monopolies.

The argument was that the totally free medical care provided to low-income families would offset the negative consequences of monopoly power.

Seen any of that free medical care lately?

Exactly how much free medical care do your local hospitals provided to low-income families?

Oh, that's right, you don't know and neither does anyone else, because the AHA lobbyists who wrote those laws made damn good and sure there would never be any reporting requirement ever, not to the States and not to anyone else.

That was the first grotesque error your governments made.

But, you can fix that.

By 1936, the AHA decided it was going to drive all AMA member-hospitals out of business or force them to join the AHA.

To do that, it did two things:

1) it grouped AHA member-hospitals together in every city across the US; and
2) it instituted the "Out-of-Network" policy.

If you bought hospital insurance from an AHA member-hospital, you could use it at any AHA member-hospital anywhere in the US, but if you had a policy through an AMA member-hospital it would not be honored by AHA member-hospitals.

1938...Wage Inflation is devastating parts of the economy. FDR stupidly orders a Wage & Price Freeze.

Your employer (I'm not talking about Mom & Pop shops) is forbidden from giving you a pay raise unless your employer first obtains prior written authorization from the National Labor Board.

How is your employer supposed to give you a pay raise, when the National Labor Board always says, "No, no soup for you"?

Employers had an idea: You go out and you buy an insurance plan from one of the hospitals and your employer will pay all or part of the cost since your employer is barred by law from giving you a pay raise.

It worked. Except the IRS cried, "Foul!" like a bunch of sissies because they wanted to tax those insurance plans.

So, the National Labor Board -- now the National War Labor Board because you're at war -- decided:

"Amounts paid by an employer on account of premiums on insurance on the life of the employee...may not exceed five per cent of the employee’s annual salary or wages determined without the inclusion of insurance and pension benefits."

Source: War Labor Reports, Reports and Decisions of the National War Labor Board (Washington, D.C.: The Bureau of National Affairs, 4, 1943) LXIV.

Source
: Office of Economic Stabilization, Regulations of the Part 4001 Relating to Wages and Salaries, Issued October 27, 1942; amended November 5 and November 30, 1942, Section 4001.1 (h) (2), War Labor Reports 4, XII.


That was the second grotesque error your government made.

But, you can fix that.

Now, it's 1946....the AHA creates the Blue Cross health insurance company, the first ever, and combines all the plans issued by member-hospitals under its umbrella.

The hallmark of the Blue Cross is it's "Out-of-Network" policy, because two months later the AMA came up with the Blue Shield insurance company.

The MAFIA controls all the unions, even many government employee unions. The Mob uses the union slush funds to launder money. Then Mob accountants crafted pension plans to allow the Mob to launder even more money.

Now we have healthcare plans. The Mob wants control of those to launder even more money, but one company, Inland Steel, resists, so there's a lawsuit that goes all the way to the US Supreme Court in 1949:

"...pension and retirement plans constitute part of the subject matter of compulsory collective bargaining under the Act."

September 23, 1948. Writ of Certiorari Granted January 17, 1949. 170 F.2d 247 (1948)

"Following the 1949 Inland Steel decision by the Supreme Court, pensions became a mandatory bargaining topic and the subject of nearly all collective negotiations."

Source: www.nber.org/chapters/c7131.pdf


Well, guess what, as an employee, you no longer have a choice in selecting your health insurance plan. You take whatever plan the union or your employer offers, and if you don't like it, sucks to be you.

You can still buy your own health insurance, but the union or your employer will not pay for it.

Another grotesque government error.

But, you can fix that. The Supreme Court just has to admit it was wrong and your federal and State governments just have to repeal the grotesque laws they enacted.

If you did that, then we're back to you choosing the health insurance you want, and your employer pays all or part of it as your compensation.

One of the things I never understood about this is why someone didn't file a lawsuit.

Think about it: You're a veteran and receive healthcare through the VA, so why would you pay for insurance, or you're covered by your spouse, so why would you waste money duplicating insurance?

But, if you reject the health insurance, then your co-workers are being paid more than you in total pay and compensation, right?

Shouldn't you receive some other cash or compensation in lieu of that? Perhaps more vacation time or educational benefits?

So, your co-workers are getting $36/hour in total compensation while you're only getting $30/hour because you rejected the health insurance that you don't need.

There's something wrong with that.

Anyway, now it's 1950. With the In re: Inland Steel decision, insurance companies are jumping head-first into the health insurance market and Blue Cross is losing market share faster than it can gain it.

Why?

Because the real insurance companies are combing life insurance with catastrophic health insurance (the only form available at the time).

Here's how it worked:

1) you pay premiums for 10 years, then you never pay another dime.
2) you and your spouse (and minor children) are covered until the day you die.
3) when you die, whatever you didn't use for healthcare is returned to you as a death benefit.

So, you have a $100,000 life/catastrophic health policy (equivalent to $1 Million today), you use $30,000 in healthcare, and when you die your named beneficiaries get $70,000.

Just so we're clear on the concept, the average wage in 1951 was $2,799/year.

$70,000. That would be equivalent to 23 years of wages.

Why is Blue Cross losing market share?

Well, what idiot is so goddam dumb they'd want to pay premiums every month until the day they died and get nothing back?

Clearly, paying premiums for 10 years, never paying another dime, and then getting money back when you die is superior to anything the Blue Cross could offer.

That's why the Blue Cross market share dropped from about 80% to 56% in just 2 years.

The Blue Cross is not a real insurance company. They lobbied the States for laws to exempt them, but there's no way States are going to exempt the Blue Cross from the cash and asset requirements to issue life insurance policies.

What does the American Hospital Association do?

They run to Congress like sissies and lobby Congress to change the tax laws to bar coupling life insurance with catastrophic health insurance:

"Premiums paid by an employer on policies of group life insurance without cash surrender value covering the lives of his employees, or on policies of group health or accident insurance...do not constitute salary if such premiums are deductible by the employer under Section 23(a) of the IRS Code."

Source: Public Law 83-591, August 16, 1954; Internal Revenue Code of 1954, Section 106. For more information see the 1986 Internal Revenue Code.


Your government and the AHA totally screwed you.

But, you can fix that.

Beginning in 1958 and for the next several years, States began mandating that insurance companies provided pregnancy/maternity coverage.

That covered married women only. Unwed mothers were not covered, and would not be until 1976.

That was just another grotesque error by your governments.

The point is not whether married or unmarried women were covered, the point is that the States started mandating coverage, whether you wanted it or not, and whether you needed it or not.

That is a trend that would continue for the next 60 years and is one of the primary reasons why many Americans cannot afford health insurance.

It is a classic example of Command Market Economics.

That would not be in a Free Market system.

In a Free Market system, the States would sit down with insurance companies and hammer out a universal definition of "catastrophic" coverage, whatever it might be.

That universal definition would be one of two base health insurance plans available to every American and it would be affordable for every American.

Single or married or married with children, your first option is catastrophic coverage and your second cheaper option is "ER" coverage.

Single or married you'd purchase ER coverage in increments of $25,000/year.

If you want $100,000/year in ER coverage then buy it. If you don't, then don't buy it.

If you want $1 Million/year in ER coverage then buy it. It will cost more per month than $250,000/year coverage, but that's how it goes.

Everything else is a rider.

If you want pregnancy/maternity coverage then buy it. If you have 60 years then you'll probably not need it, so don't waste your money buying it.

If you want birth control coverage, then buy it and if not, then don't buy it.

If you want primary care doctor visits covered, then buy it, if not, don't.

If you want specialist doctor visits covered, then buy it.

If you want a comprehensive rider that covers primary care and specialist doctor visits, then buy it.

If you want prescription drugs covered then buy it.

Currently, some States mandate autism coverage, while other States do not. It should be a rider. If you want it, buy it. By the time your kid has 5 years, you should know whether they're "artistic" or not and you can drop it if they aren't.

Congress can stop subsidizing employers who provide health plan coverage and simultaneously penalize employers who offer health plan coverage.

A good law would require employers who offer health plan coverage to obtain a license at the cost of $25,000 per employee, whether the employee was covered or not.

Employers would drop health plan coverage like a hot rock.

Where does that leave you?

Simple: We go back to 1932 when you chose your own health plan on the open market and your employer just paid all or part of it as part of your compensation (in which case your employer would be eligible for the subsidy).

So, your employer no longer lords over your healthcare, the ball's back in your court and you are in total control.

Next step....the 50 States repeal the laws allowing hospitals to operate as monopolies and then go after the hospitals with anti-trust law suits with a vengeance.

Would you like to see how monopoly power works?

Okay...here you go:

Wills v Foster 229 Ill. 2d 393 (2008)

The plaintiff owed $80,163 in medical bills but the hospital accepted an insurance company negotiated settlement of $19,005 in full satisfaction.

Let's be clear on the concept here.

The hospital billed $80,163, not the insurance company.

The insurance company is the hero here, because they did a tremendous favor to everyone by negotiating a settlement of $19,005.

That happens 24/7 in America. Hospital bills $110,000; insurance company settles for $26,000. Hospital bills $33,000; insurance company settles for $9,000. Hospital bills $214,000; insurance company settles for $72,000.

Why in the hell would you ever allow a system like that to perpetuate?

Someone explain it to me: Why do you think that is so fantastic?

Even though the hospital accepted a settlement of $19,005 their profit margin was 300%-400%.

That's why they settled.

The actual cost of the medical procedure was $5,000-$7,000 which is why they settled for $19,005.

So, why did they bill $80,163?

Is there some part of "monopoly" that you don't understand?

That's what monopolies do: Price-gouge.

Why is the Clinic Model and Polyclinic Model used by Euro-States superior to the antiquated out-dated outmoded Hospital Model used by the US?

I'll let the former German Minister of Heath explain it to you:

Polyclinics—clusters of general practitioners who work together to form more specialized primary care centers—were used extensively and quite successfully in the former German Democratic Republic.

However, many politicians in West Germany initially disliked the idea of polyclinics because they associated them with communist ideology. It took a while for many people to understand that polyclinics offer significant advantages with regard to communication, coordination, and cooperation.


Source: How Germany is reining in health care costs: An interview with Franz Knieps pp 30-31.


Imagine that....so-called "communist" countries adopting a Corollary of Capitalism: Diversify & Specialize.

In the real world, when a company has a failing operation that is losing money hand-over-fist, let's say your cartage and warehouse operations, what do they do?

Do they price-gouge their customers to subsidize their failing operations?

No, but that is exactly what hospital monopolies do.

In the real world, that company would shut down the operation, sell it off, spin it off or outsource.

That's not what hospital monopolies do.

When a hospital has an operation that is losing money like Allergy, Anesthesia, Bariatric Medicine/Surgery, Burn/Trauma, Cardiac Catheterization, Cardiology, Cardiovascular Surgery, Colorectal Surgery, Dermatology, Electrophysiology, Emergency Medicine, Endocrinology, Family Practice, Geriatrics, Gynecologic Oncology, Hematology/Oncology, Hepatobiliary, Infectious Disease, Internal Medicine, Interventional Radiology, Neonatology, Nephrology, Neuroradiology, Neurology, Neurosurgery, Nuclear Medicine, Obstetrics & Gynecology, Occupational Medicine, Ophthalmology, Otolaryngology/Head & Neck Surgery, Palliative Care, Pathology, Pediatrics, Pediatric Surgery, Plastic & Reconstructive Surgery, Podiatric Surgery, Psychiatry, Pulmonary Medicine, Radiation Oncology, Radiology, Rheumatology, Surgical Oncology, Thoracic Surgery, Transplant Surgery, Wound Care, ENT, General Surgery, Gastroenterology, Oral/Dental Surgery, Orthopedic Surgery, Pain Management, Urology or Vascular Surgery they do not shut it down.

What they do is price-gouge the snot out of you to prop up and subsidize a failing operation.

Take away their monopoly power and they will no longer be able to do that.

Force Hospitals to break up into smaller cost effective highly efficient Clinics and Polyclinics and you cut the cost of medical care by 30%-60% overnight.

That in turn will drive down the cost of health insurance by 30%-60% overnight.

Quote:
Originally Posted by guidoLaMoto View Post
Now the Dow has returned an average of 5.5% annually since its inception well over a century ago.
The DOW is 30 companies.

That's 30 companies out of the ~880,000 that are legally allowed to sell stocks.

Those 30 companies are not the same over the years as they change from time to time.

There are moral, ethical and legal issues with the government dumping money into corporations.

Need I remind you of NBC and General Dynamics?

Maybe I do.

General Dynamics made the F-16 Falcon.

It crashed and burned. A lot. I had to clean up some of the messes made.

How did NBC treat General Dynamics in its news reporting?

Well, NBC did not report them and when it did, it spun them as "pilot error."

The real cause was a design flaw that allowed certain electronic components to chaff the wiring which is what led to the air crashes.

Is that what you want?

Do you want those companies doing all kinds of illegal activities and your government turning a blind eye and covering up for fear of losing money?

What kind of citizen are you?
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