Brad Causey
Brad Causey,
Editor and Publisher
R. Shannon Pollard
Kevin Sommers
David R. Wehry
James E. Foy
The Freedom Letter
How to Fix Obamacare
The “Affordable Health Care Act” of 2010, (a.k.a. Obamacare) was passed in 2010. Its implementation was delayed until 2014.
The ACA is neither health care nor affordable. For those who have read George Orwell, it is doublespeak at its finest.
The healthcare “marketplace” was not a good one prior to 2010. Almost all the issues were caused by over regulation, third party payers, and a tax code that treats premium payments differently for companies and individuals. The ACA increased regulation, added mandates, decreased individual choice, and increased costs.
An example: Prior to 2012 a healthy adult in his or her 50s could buy a high deductible major “medical” policy for less than $150 per month. A major medical policy covers 90% of the cost of catastrophic events such as major surgery, major injuries, etc. very much like an automotive policy. If you total your car they will pay the majority of the money to replace it. In 2016, the equivalent policy is $900.00 per month if purchased privately. The deductible is higher, the network is more narrow, and virtually everything is out of pocket for the first $6000.00.
Some history: “Health Insurance” is not insurance in the conventional sense. It is not pooling of resources but simply a collection of funds that is administered by a third party.
Health insurance, as we have come to know it, is the bastard child of federal price controls during WWII. Companies that produced products for the war effort from 1942-1945 (pretty much everybody) were given a “cost +” contract of so much per item or completed product. They could not give raises to their employees unless approved by the department of war. At that time DOW (now DOD) was a little too busy with battle strategy and logistics to be concerned with a 5 cent per hour raise on a particular assembly line. So, the concept of “employee benefits” was invented by private industry to get around the exact wording of their government contract. After the war, when wage and price controls were repealed, the companies collecting the money for this new “insurance” hired lobbyists to get a tax break for premiums, therefore codifying the practice in law.
Regardless of the intent of those who wrote and voted for the ACA, it should have been obvious that when you require more things it adds to the cost. Price controls always lead to both higher prices and shortages. The ACA requires all policies to cover ten “essential” items:
  1. “Ambulatory services” such as outpatient minor surgeries, home health, and hospice
  2. Emergency Services (trips to the ER, and care once there)
  3. Hospitalization
  4. Maternity and prenatal care
  5. Mental Health and Addiction treatment
  6. Prescription Drugs
  7. Rehabilitative Services and devices
  8. Laboratory services
  9. Preventive Medicine (screenings, annual physicals, chronic conditions)
  10. Pediatric Services (“children” under 19 including dental, eye exams and lenses)
In addition to these “essential” services, policy underwriters are required to insure everyone who applies regardless of age or current medical condition. They must allow parents to insure their “children” up to age 26. There is a prohibition on charging the least insurable more than 3 times the cost of the most. And, companies are prohibited from spending less than 85% of premiums on actual reimbursements. In something other than doublespeak, an upper limit on profit. Companies (with more than 50 employees) are required to insure all “full-time” employees, now defined as 30 hours per week. Individuals not able (or willing) to work full time are required by law to buy health insurance or pay a “penalty” for non-compliance. Of course, because of all the mandates and regulations, there are subsidies available to those who need insurance but cannot otherwise afford it.
Logically, there should be some comparison between other forms of insurance and “health” policies. Lets begin with automobile/light vehicle insurance for numerous reasons. One, most everyone is familiar the with major details because you probably own a car. Two, all states require some form of “financial responsibility” in relation to liability for vehicle owners, essentially requiring most everyone to purchase a policy or face fines or imprisonment. And, unlike health insurance, companies are able to compete across state lines therefore giving us numerous choices of coverage. The requirement to buy automobile insurance is a state mandate, not federal. In addition, most states require only liability (minimum) coverage. Everything else is optional. Some options provided by the automotive insurance market:
  1. Uninsured motorist
  2. Higher limits of liability other than those required by law
  3. Medical payments
  4. Comprehensive (damage to vehicle by something other than another vehicle)
  5. Towing and Labor
  6. Rent a car (transportation) when your vehicle is not available
  7. Collision (damage to your vehicle by another vehicle)
  8. Choice of a high or low deductible
I am sure there are a few others. In brief, in regards to automobile insurance, we have numerous options, minimum legal requirements, interstate competition, and affordable prices. I am unaware of federal subsidies for automobile insurance.
In other words, the automotive insurance market actually is allowed to work, in contrast to ACA requirements for the health insurance marketplace.
Why not allow people to choose the options they want? An easy example: Let us assume that someone is single, with no children, or a married couple with adult children. Why should they be forced to pay maternity costs for other peoples children? Mental health and addictions? I think it is a safe bet that the majority of citizens will likely require neither “service” for extended periods. Perhaps never. Why should they pay for others?
I think we can all agree that outpatient surgeries, hospital stays, ER visits, lab work, and life saving medications are good things to have help with. In fact, I am sure there are good arguments for many of the “essential” requirements. However, making people pay for something they are likely never to use is tyranny not good governance.
If we want to improve health insurance we need to get rid of federal mandates, price controls, and the vast majority of other regulations. Individual states are perfectly equipped (and generally more competent) to regulate care and insurance.
What medical procedures have shown DECREASES in cost in recent years? Cosmetic surgery and laser eye surgery. I would speculate this is true for two reasons: “Insurance” does not pay for either and there is a lot of competition.
The way to “fix” Obamacare is not to fix it at all. Get rid of it entirely: The concept, the regulations, the enforcement, the taxes, the mandates, everything!!! From the political standpoint, upsetting the status quo for the millions that have subsidies is a non-starter. Therefore I recommend maintaining the subsidies for a period of time. A year sounds good. If needed as a point of negotiation, then add maybe six months until the end of fiscal year 2018. By then people will be able to afford less restrictive policies and most of the need for subsidies will go away. We also need to equalize the tax status of heath insurance premiums. If companies can deduct it as an expense, then individuals should be granted the same privilege. Or, get rid of it for both. Equal treatment under the law is fair and part of the 14th amendment.
While we are on the subject we need to rethink the current third party payer system for health care. Whether it is a private insurance company, the federal government (medicare) or a state/federal hybrid (medicaid); the entire concept is flawed. What if you had ”food“ insurance? It is likely people would buy a lot of things they did not need. They also might likely take a lot of ”tests“ to make sure said food was appropriate. Then we would have to justify our purchase with additional documentation (food records.) Sound familiar? Take homeowners insurance as another example. Your house burns down, is severely damaged in a storm, floods, is involved in a property crime, or other catastrophic event. You file a claim, the adjuster comes out, and you receive a check for some percentage of damages. You do not file a claim if you replace the carpet, install blinds or curtains, paint the walls, or decide you dont like the style of the kitchen window. Back to the automotive example, we are expected to buy our own fuel, tires, brake pads, and oil changes. We do not expect the insurance company to cover minor expenses, only catastrophic ones.
In this line of reasoning, what is wrong with paying for your annual checkup out of pocket? Prior to Obamacare, some companies offered a “hospital” policy only. For working adults in good health, an excellent plan. You pay the doctor out of pocket, but in the event of some major medical event, your hospital stay is covered. Premiums were very affordable. Why pay for a pharmacy plan if you take no medication? And the list goes on.
Freedom and Liberty are considered good things. The ACA respects neither and decreases both.
Definition of Liberty:
liberty |'libərtē|
noun (pl. liberties)
  1. the state of being free within society from oppressive restrictions imposed by authority on one's way of life, behavior, or political views: compulsory retirement would interfere with individual liberty.
    • (usu. liberties) an instance of this; a right or privilege, especially a statutory one: the Bill of Rights was intended to secure basic civil liberties.
    • the state of not being imprisoned or enslaved: people who have lost property or liberty without due process.
    • (Liberty) the personification of liberty as a female figure.
  2. the power or scope to act as one pleases: individuals should enjoy the liberty to pursue their own interests and preferences.
    • Philosophy a person's freedom from control by fate or necessity.
Definition of Freedom:
freedom |'frɹdəm|
the power or right to act, speak, or think as one wants without hindrance or restraint: we do have some freedom of choice | he talks of revoking some of the freedoms.
  • absence of subjection to foreign domination or despotic government: he was a champion of Irish freedom.
  • the state of not being imprisoned or enslaved: the shark thrashed its way to freedom.
  • the state of being physically unrestricted and able to move easily: the shorts have a side split for freedom of movement.
  • (freedom from) the state of not being subject to or affected by (a particular undesirable thing): government policies to achieve freedom from want.
  • the power of self-determination attributed to the will; the quality of being independent of fate or necessity. unrestricted use of something: the dog is happy having the freedom of the house when we are out.
Let us restore liberty and freedom. Let us enjoy “the state of being free within society from oppressive restrictions imposed by authority on one's way of life, behavior, or political views.” Let us exercise our “power or right to act, speak, or think as onewants without hindrance or restraint.”
Thank you for reading the freedom letter.