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Medical Insurance

Issue
 
   Medical costs have dramatically risen over the years with insurance premiums becoming too excessive for the average person to afford. Health-related costs are also the primary reason for personal bankruptcies in this country.
Near-Death Evaluation

   One manner of reducing medical costs is to deny treatment during the final days of a patient's life. On average, nearly 70% of a person’s lifetime medical expense occurs during the last two days of their life. Providing medical treatment to patients who are about to die within a day or two is a rather unjustifiable expense that should be avoided if possible.

   The situation may be improved upon if physicians were to follow a standardized procedure that determines the survival status of a given patient before administering treatment. If the survival prospects are low then care should only be administered to ease the patient’s suffering rather than treat the medical condition itself.

   Denying adequate care for life-threatening conditions may become unpopular and difficult for physicians to follow, however, the policy has the potential to reduce medical costs by a rather large amount (e.g., 50% or greater), which is significant just by itself.
Price Controls

   Another measure that may be used to reduce medical costs is if the Department of Health maintained a charge list to determine the cost of all medical products and services in the country. A charge list is commonly used by hospitals and medical centers to regulate expenses on how much they should charge patients for their services. The Department of Health should adopt a similar policy in order to enforce price controls on the entire medical industry.
Ban Insurance
 
   Another way to reduce medical costs is to simply ban health insurance. All insurance policies are pyramid schemes where a large number of contributors pay into the system, but only a few benefit.

   The problem that insurance causes is that by having a large group of people pay for a single patient, the medical industry is allowed to charge much higher than what a solitary person may afford. However, if insurance was banned then the entire situation would correct itself where the medical industry would be required to reduce costs in order to remain in business.
Sample Numbers

   Suppose that the average salary of a person is $50,000, which could be used as a guide to estimate the affordability of health care if medical insurance was banned.

   In this example, 5% of gross salary should be considered for building a personal health expense account that will pay for a lifetime of medical costs. The medical industry will have to reduce costs in order to fit within this limit to be affordable for the average person:

                                      $50,000 gross salary
                                            15% total tax of skeleton gov't. (federal, state, city combined)                                                                                35% housing/rent
                                            25% living expenses (food, clothing, entertainment, etc.)
                                            10% large purchases (accumulate multiple years for new car or appliances)
                                            10% savings/investments
                                              5% health care

   The above assumes that voters will approve of the proposed skeleton government (max 15% total tax), and does not include anything extra like paying off the national debt or Social Security. This means that the medical industry will have to reduce expenses to fit within $2,500 per year for a given patient. A 40-year period, from ages 20-60, results in a total of $100,000 being available for a lifetime's worth of medical expenses.

   The medical industry (or Health Dept.'s universal charge list mentioned above) will need to cut costs in every aspect in order to accommodate this estimate.

   For example, consider the following regarding the cost of surgery. The average salary for general surgeons is $450,000, and registered nurses $98,000. If five surgeries are performed each week (which is below the national average so it's easier on the medical staff), that results in $3,461 for two surgeons and $1,507 for four nurses, or $4,968 total for six medical personnel per procedure (including pre-/post-care).

   Add the expense of medical instruments, supplies, and the use of a sanitized room, the average surgical procedure should be approx. $8,000-$10,000, which is affordable with the above estimate. However, the medical industry charges a great deal higher than that (e.g., coronary bypass costs up to $200,000).

   After years of relying on the "blank check" aspect of insurance where the medical industry overcharged patients excessively, medical costs under the new policy will need to adjust so that patients pay for the procedure themselves. Which will bring costs down to more normalized levels.

   Pharmaceuticals, which have stated that the high cost of prescription drugs is due to the additional expense of failed drug trials, will have to limit prices to only consist of the manufacturing cost of the drug itself. The additional expense of failed trials during research and development will primarily be funded by donations and charitable organizations rather than passed along to the consumer.
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   If enough cuts are made by the medical industry to accommodate the national salary estimate (or forced due to Dept. of Health's universal price controls), adequate care may be provided without bankrupting the average citizen in this country.

   Since the medical insurance industry will be dismantled by this policy, their stockpile of funds from collecting premiums over the years should be returned to the original payer as a lump sum to give patients an initial boost to their personal healthcare savings accounts.
Plan of Action

   The first step for resolving medical costs is for the nation to decide whether to grant the Health Dept. the ability to enforce price controls on the medical industry, or continue with the present manner of insurance companies negotiating prices. Normally, the cost of products and services is managed by their supply and demand ratio, however, relying on such a measure may not be appropriate for healthcare situations.

   The reason is that under normal circumstances, a patient will never refuse medical treatment for their health condition so choice is essentially removed from the equation. This prevents the supply and demand mechanism from being an effective means in controlling costs, and explains why costs have risen so dramatically over the years. Because of this, the lack of a checks and balances system being in place provides the justification that the Health Dept. should be allowed to enforce price controls on the medical industry.

   The second matter to consider is if there are other ways to reduce medical costs. Such as limiting malpractice lawsuits, restricting pharmaceuticals to only charge for drug production, and denying medical treatment for near death patients (as mentioned above). Implementing additional measures will help reduce costs that the Health Dept. needs to consider for efficient price control.

   Lastly, the nation needs to decide what to do about medical insurance itself. Either continue with private insurance, establish a nationwide insurance policy (e.g., Medicare For All), or ban insurance entirely.

   Each option has its advantages and disadvantages:

      Option A: (private insurance)
         Costs continue to rise due to the need to make profits (policyholders pay higher premiums every year)
         Increased chance of being denied coverage or not receive benefits
         Negotiated prices may continue but prove to be ineffective in controlling costs
         Businesses, especially small businesses, will transfer more insurance premiums to their employees

      Option B: (nationwide insurance policy)
         Non-profit federal program to minimize management costs
         All citizens are covered and receive benefits for any medical treatment (never denied)
         Medical costs continue to increase due to large group paying for individual health care
         High insurance premiums to handle the entire nation's medical expense (may be unrealistic)

      Option C: (ban insurance)
         Insurance dismantled to fund personal healthcare accounts (lump sum initial amount)
         Employers no longer pay insurance companies (avg per employee $8,951/yr single, $25,572/yr family)
         Employers may redirect former insurance premiums to personal healthcare accounts (avg $15,500/yr)
         Civil rights protected by not being forced to pay for others in a group plan
         Elderly/retired/unemployed at a disadvantage with little to no personal healthcare savings
         Everyone pays for themselves out of pocket (may not be able to cover all medical treatments)

   Despite the risks involved, Option C (ban insurance) may become popular because employers will pay workers their insurance premiums that they had previously paid to insurance companies (i.e. $15,500/yr which is the average of single/family coverage). When this is combined with the employee's own annual insurance premiums, the amount will accumulate over the years and the funds may be used for other expenses than just medical if ever needed.

   The biggest disadvantage, however, with this option is that the elderly and retired may not have enough in accumulated savings to pay for their medical care since they are no longer working to receive such funds. So, one way to solve this problem would be to split the employer's $15,500/yr payment with half going to employee's accounts, and the other half going to a nationwide fund for the elderly/retired. Or, some other ratio including giving employers some relief.

   With 160 million workers in America that more than doubles the 68 million collecting Social Security, this  adjustment should be able to support the elderly/retired as well. After 25 years or so when the situation balances out, any unspent funds in the national account may be returned to the employers since the adjustment is only a temporary one to handle the transitionary phase.

   Overall, regardless of which option is chosen, establishing a nationwide price control system by the Health Dept. is of the highest importance since it makes all three options more likely to succeed than otherwise.
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