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October 9, 2007

Rob your insurance company

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Subject: Rob your health insurance company

We can make the health care industry perform like the computer industry, providing ever better quality at ever lower prices. We can . . .

  • Make your health insurance belong to you, not your employer
  • Make insurance premiums increasingly less expensive
  • Eliminate insurance co-pays, fully fund your health insurance deductibles, and make insurance company denials of care almost completely disappear

We can even make affordable health care available to everyone, at all socio-economic levels. Better yet, the amount of money available to fund your health care could grow constantly. You could even be able to leave unspent health care funds to your children as an inheritance.

But that’s not all. Our proposal would also save Medicare from its looming bankruptcy while making our economy vastly more productive!

All of these things can be done at once, with one simple change from Congress . . .

Congress must make it possible for you to rob your health insurance company.

We use the word “rob” as a metaphor. We want to take money that now goes to the health insurance companies, and to the federal government, and let you keep it. This will empower you to pay your health care expenses directly, without having to argue with your insurance provider, or the federal bureaucracy.

We also want you to be able to earn interest on that money, just like the insurance companies do now. Only we want those interest earnings to come to you tax free, so you can have an ever-increasing pool of money to fund your own health care.

Please understand, the only way insurance companies can stay in business is by taking more money from their customers than they pay out in benefits. And the federal government must do something similar. To cover the administrative costs for its health care programs it too must take in more than it pays out.

Worse still, the politicians always confiscate their own cut of your money and use it to reward friends and punish enemies. There’s a lot of corporate welfare buried in federal government health care expenditures. This is money that powerful special interests are able to rob from your taxes because they have more insider clout than you do. We want you to rob this money back!

We want to cut out all the overhead and waste, from both the insurance companies and the federal government, so you can have the money to spend on your own health care. Here’s how it would work . . .

The tax free money your employer now pays to your insurance company, or that you currently spend out of your own pocket after taxes, would instead go to a Health Savings Account (HSA). You would own and control this account. You would constantly earn compounding interest on this money, just like the insurance companies do now, only your interest earnings would accumulate tax free!

You would pay for both your basic medical expenses and major medical insurance out of your HSA. You would own the insurance policy, not your employer. You could buy a high-deductible major medical policy so the premiums would be low. Your HSA would pay both the premium and cover the deductible!

When you go to the doctor or the hospital you would simply whip out your HSA debit card and pay your bill up to the amount of your deductible. Your insurance company would pay any expenses above that amount. This means that all of your medical expenses would be fully funded, tax free, in advance, without co-pays.

Better yet, as the funds in your HSA grow you could raise the deductible on your insurance policy, and lower your insurance premium. The less insurance you need the more your premiums would shrink. And less dependence on health insurance would also reduce the risk that your insurance company would deny service or interfere with your treatment choices.

You would control what doctors you see, not the insurance companies. You would control what kind of treatment you receive, not the insurance companies. Your doctor would work for you, instead of for your insurance provider. And your insurance company would work for you too, instead of for your employer.

All of these benefits would be available to the self-employed and low income workers too, because any money deposited to an HSA would not only avoid the income tax, but Social Security and Medicare taxes too. These are the taxes that hurt the self-employed and low wage earners the most.

These tax savings, along with low premium major medical insurance, would make health care affordable for nearly everyone. This approach might even reduce the number of people who are dependent on existing government health care programs, reducing the future economic stress on Medicare and Medicaid.

Powerful things will happen when we reach this state of affairs. When people are spending their own money for health care they will start being cost conscious. They will want to keep as much money in their HSAs as they possibly can, so the interest they earn will compound, their balance will grow, and the amount of insurance they need will shrink.

People will start asking what procedures cost, and start looking for better prices! When doctors and hospitals have to start providing prices in advance they will start to compete with each other, on both price and quality. Indeed, THIS IS ALREADY HAPPENING!

Thanks to the horrors of dealing with insurance companies, many doctors are establishing cash-only practices with lower prices, and they are advertising these prices to attract customers!

Still other companies are being created to provide a wide range of basic medical services at lower pre-published prices with shorter waiting times. They are doing this inside shopping malls!

This is happening for two reasons . . .

1. Our current model of health insurance makes no sense. It’s entirely driven by federal tax policies that create financial incentives for the dominance of Cadillac health care plans tied to employment. If car insurance worked like this it would . . .

  • cover gasoline and oil changes
  • limit your choice of gas stations and mechanics to those dictated by your insurance company
  • hide the costs from you, the customer, and only make them visible to your insurance company
  • impose co-pays at the pump
  • force you to switch car insurance providers every time you change jobs
  • cause your insurance company to ration your use of gas, oil, and auto repairs
  • strangle mechanics in regulations and paper work
  • make prices and premiums soar to the sky while reducing the quantity and quality of available services!

To avoid these negative side effects doctors and medical service entrepreneurs are already creating low price cash alternatives, and this trend is now accelerating because . . .

2. HSAs already exist in a limited form. Even limited HSAs are already changing the face of health care. They are providing incentives for the creation of new, lower cost alternatives, like doctors in malls and cash-only practices with competitive pricing.

To understand the wonderful things that would happen if Congress removed the legal chains from HSAs, you only have to look at what has already happened to the cost and quality of elective medical procedures. Lasik eye surgery, which isn’t covered by most insurance plans, is a perfect example . . .

The quality of Lasik procedures has soared while the price has plummeted, just like in the unregulated computer industry!

According to the federal government’s Bureau of Labor Statistics the cost of the Lasik procedure has dropped from $2,106 in 1999 to $1,626 in 2004! This is the exact opposite of what has happened to costs and quality in the government and insurance company dominated portion of the health care industry!

This has happened because Lasik doctors have to compete for customers who are paying with their own money. Unlimited HSAs would cause these competitive pressures to be applied to the entire health care industry, giving us ever increasing quality at ever lower prices.

Congress could give us this benefit by making just three changes to existing law . . .

  • Remove the limits on how much can be contributed to an HSA
  • Make insurance premiums tax deductible and allow them to be paid out of HSAs
  • Remove legal mandates on what kind of insurance people must have — this will permit companies to provide a variety of competing policies at a variety of competing prices

Why should you send your money to an insurance company, or to the federal government, so they can do at a higher cost, and with less quality, what you could do for yourself at less cost, and with better quality!

But there are even more benefits to unlimited HSAs. As they reduce the cost of health care, they will also lessen the financial pressure on government provided health care programs, such as Medicare and Medicaid. And as more people have more money in their HSAs fewer people will need to rely on these programs.

Unlimited HSAs could help prevent the looming bankruptcy of Medicare. Better yet . . .

Congress could also create HSAs for people dependent on government programs. Instead of paying doctors and hospitals directly, the government could make deposits to their HSAs. This would greatly expand the competitive pressures on doctors and hospitals to improve quality and lower prices. But that’s still not all . . .

Unlimited HSAs would dramatically increase the U.S. savings rate, creating a huge pool of capital to drive economic expansion, making all of us richer and happier.

We can do this, or we can follow the failed example of the countries with socialist health care systems, which provide poorer care at a greater cost with long and often deadly waiting lists for treatment.

If you want ever improving health care at ever lower costs, please send a message to Congress. In your personal comments ask them to . . .

  • Remove the limits on how much can be contributed to an HSA
  • Make insurance premiums tax deductible and allow them to be paid out of HSAs
  • Remove mandates on what kind of insurance people must have, thereby permitting companies to provide a variety of competing policies at a variety of competing prices

Be healthy, be happy, be rich. Do it now.

Please, also consider making a contribution to further our work.

Thank you for being a DC Downsizer.

Perry Willis
Communications Director, Inc.

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