Enough

I consider myself conservative – had I not missed the age requirement by two days I would have voted for Barry Goldwater in 1964. I’m a big fan of individual responsibility. I believe life choices good and bad are major factors in where we end up in life.

HOWEVER, when it comes to comes to health care and retirement in the United States, our systems have failed AND I am ready for something different.

I spent nearly five decades designing, managing and studying retirement and health care coverages. I know how people act, react or ignore these programs. I know all too many people do not accept responsibility in these areas and probably never will.

Think of the complexity involved in obtaining and paying for health care. Think of the numerous different programs in place at the federal and state levels. Think about the differences simply based on where you reside or where you work. Think about all the ideas and strategies that have not worked.

Why do we have reimbursement systems that pay different amounts to health care providers for the same service? Why do we allow companies to advertise drugs like toys?

The same is true for retirement saving. Why do we need different plans with different rules and different limits based in part on where and how you are employed? Why are we allowed to save different amounts within different plans? Why are the rules and laws so complex? It’s a mess.

It seems so simple.

We need a uniform basic universal foundation of coverage for health care and retirement income (in addition to current SS) for everyone.

And we need to tell the American people the truth about what that means, what it costs and how it will be paid for.

Is it possible the United States can be right in how it approaches health care and retirement income while most of the rest of the industrialized world is wrong?

If you are opposed to such an approach, tell us why and what better idea you have.

20 comments

      1. Yes, done right! “Done right” requires the same processes and factors (individual responsibility, burden sharing, everyone into the pool, etc) that we lack today. Let’s try to “do right” what is already in place today, and if “done right” fails, we can try something else …

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  1. I don’t have any answers that will work for healthcare. My first thought is to fix the pricing, that is if a drug is offered, then it is the same price for everybody. No backroom middleman deals. The same for medical providers and hospitals. Of course I see problems with this. Healthcare is so complex that it is so hard to comparison shop.

    We have just trained society to over use medical testing with the pandemic. Because of the nature of Covid, people were told to get tested, tested, and tested. In some cases even if you tested positive, doctors were not prescribing anything. I am not saying that this was wrong but what will happen in the future? There are TV commercials now for rectal cancer test. Once you use this test and have a possible positive results, you need a colonoscopies test to confirm. All future colonoscopies are not covered as a test but as treatments, usually billed at the co-payments rates. If you have a sore arm, you been trained to get a test. Headaches, get a CAT scan. So how do you control costs with unnecessary tests after being told test, test, test?

    As far as retirement plans, there are too many. Pensions, 401Ks, Roth 401Ks, IRAs, Roth IRAs, and 403Bs, all with different rules and amounts permitted to be saved. There is no reason why there can’t be just two types; a Roth IRA and plain IRA and be mandatory. Charles Schwab, Fidelity, E*Trade all offer low cost index fund accounts or you can pick individual stocks for your IRA. The danger is that a broker may talk you into a bad trade. If employers want to offer a “pension” as way to retain or attract employees, then have the IRS allow a method to contribute to your IRA plan.

    There were some good suggestions written here. But without the personal responsibility, none of it will work. Healthcare and retirement are not rights. Should society pay for those who do not want to pay for their healthcare and demand charity service at hospitals? Should society pay for senior housing and buses when some refuse to save for retirement? What about all those who just drop out of society and become drug addicts? It may sound mean but why should I be punished for working and saving?

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  2. The US will Never have a rational system for the reason you pointed out in your first paragraph, second sentence… individual responsibility. That’s a primary tenet of the American Way. Of course, the next tenet of the American Way is ‘if I’m stupid it’s your fault’.

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  3. Richard as a Reaganite I come to the same conclusion as you do. I would throw in education as well. Our taxes are very low but we get very little in return.By all means increase taxes if we can eliminate health insurance and college debt. Lower the age for Medicare and increase Social Security taxes to make the program solvent. Two steps in the right direction.

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  4. The Health Care solution is much more complex. Sorry about the length of this response.

    Here’s the solution I have suggested for over 30 years – yes it predates Hillarycare and Obamacare. I updated it in 2007 to include Health Savings Account access.

    The structure is in three parts:

    Part 1 – That which employers and employees cannot, and should not be responsible for as a function of employment. This is the portion of health costs that exceeds some specific dollar amount. The last time I updated this, my suggested threshold was $25,000. So, once an individual’s expense exceeded $25,000 for a calendar year, this would become society’s issue (i.e. taxpayer funded with FICA-Med which would broadly redefine covered compensation as the greater of FICA-Wages or Adjusted Gross Income). Because over 50% of all medical expenses are incurred by about 5% of all Americans, this socialization of expense would significantly reduce the burden on individual/private sector coverage. I would use Medicare or Medicaid reimbursement rates – as, obviously, these are individuals with significant medical conditions. This would likely cost ~2% of covered compensation – adding 150% to the current 1.45% of FICA-wages cost for Medicare Hospitalization Insurance. . I borrowed this from proposals by Senators Ted Kennedy, John Kerry, Jack Reed (all Democrats), Bill Frist (Republican), and Tennessee Governor Phil Bredesen.

    Part 2(a) – This would be employer sponsored coverage, up to the $25,000 limit. The only available plan would be a Health Savings Account-capable plan, where the plan would have a minimum deductible for each covered person of $1,400, 80%/20% coinsurance, applied to the first $25,000 of covered expenses (out of pocket maximum of $6,120. Covered expenses would be limited by Reference Based Pricing to no more than 150% of Medicare allowable charges. So, yes, a provider could bill an individual who is 64 years and 364 days old 50% more than they could bill her if she were 1 day older. Upon reaching age 65 (or qualifying for Social Security disability benefits for 30 months), employer-sponsored coverage would stop and individuals would be automatically enrolled in Medicare. Cafeteria plan and other existing employer-sponsored plan provisions would continue to apply. We would deploy automatic enrollment in the Health Savings Account, with a default deferral equal to the annual deductible ($1,400 a year), then escalated 25% every subsequent year until we annual deferral reached the Health Savings Account maximum annual deferral, currently $3,650. The default deferral would apply to every individual covered under the plan. The participant could always opt out of coverage and deferrals. The $25,000 limit is a variant of the CoverTN implemented by Tennessee Governor Phil Bredesen. https://khn.org/morning-breakout/dr00044339/ Per person cost of coverage using this benefit structure would likely decline to less than $2,000 a year.

    Part 2(b) – For those who are not eligible or eligible but not enrolled in an employer-sponsored plan (either as an employee, a spouse or a child), they would be defaulted into Medicaid (eliminating the exchange based coverage options) – so there would be universal coverage. The premiums would be age based – based on historical claims experience. At age 65, every individual would be defaulted to/automatically enrolled in Medicare. Medicare would apply to those who qualified for Social Security Disability Benefits (after 30 months, same as today). Every individual must file a tax return. They would be required to pay 100% of the premium, however, if they were not financially able to pay the premiums, the amount would be due on their tax return, and they can make arrangements with the IRS to make scheduled payments. Here, the per person cost of coverage would likely be less than $1,000 a year.

    Keep in mind that American taxpayers would continue to pay 75% of the cost of Medicare Part B and Part D coverage through general revenues (mainly income taxes).

    So, the positives on this one include:
    – Removes the largest medical expense and socializes it – as the burden of such spend is not appropriate for an individual nor an employer.
    – Eliminates so-called Medical Bankruptcies – the BIG LIE from Obamacare days,
    – Reduces the cost of employer-sponsored coverage and creates an incentive for individuals to save for out of pocket costs.
    – Encourages individuals to secure employment with an employer who sponsor’s coverage, if only to avoid the cost of the Medicaid premiums.
    – Leverages existing systems and processes – Medicare, Medicaid, employer-sponsored plans, income tax system
    – Moderates inflation – average annual increase in cost of Medicare cost sharing provisions has been 3% – 4% since 1983
    – Addresses the #1 challenge of socialized systems everywhere else in the developed world – where people want the best health care coverage YOUR MONEY WILL BUY.

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    1. The flaw in this thinking – and mine for many years – is the individual responsibility element. It has never worked and never will. We need to realize Americans don’t want the responsibility and don’t think of health care as something they should spend their own money on. Therefore the bulk of costs will have to be hidden in taxes which IMO these days must be all employer and worker payroll taxes. That way it’s all “free.”

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      1. And, if you hide the cost, you’ll see utilization explode – making the system unsustainable unless, you ration care.

        Again, better the devil you know….

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      2. That’s what I mean by telling Americans the whole truth. Every system in the world does that to some extent, in some way. There are tradeoffs, but I have to say, every person I have talked to in various countries, including England, Canada, Spain, Germany and France love their systems and think are crazy. My retired friend in England who has no OOP costs or premiums sees his system as “free” the high lifetime payroll taxes notwithstanding.

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      3. If we were Spain, France or England, with not only high taxes but high taxes broadly applied, as well as significant restrictions on immigration, sure. But, we be Americans, where 47% of Americans pay no federal income tax, where we have millions of immigrants every year, where physicians often enter the medical profession with $300 – $500K in debt, where we need every new drug and every new process and equipment, etc. and where no one can tell anyone no . (unlike NICE, etc.). I’m not interested in moving to Spain, England or France. And, last I looked (which was a while ago), many more people emigrate to America from Spain, France and England than from America to those countries.

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  5. I agree with you. One might say you have pointed out the obvious. Some leaders from the left support your ideas for improving both, but absurdly claim that taxes will not need to increase for those under the $400K threshold. And too many from the right will equate your proposals with socialism. Theoretical and academic arguments are important, however it’s hard to ignore how miserably our present system is performing.

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  6. A universal retirement plan has been available to all American workers with wage income since 1982 – that’s 42 years. The same plan has been available to those American workers who do not have access to an employer-sponsored retirement plan since 1975 – that’s 47 years. It is called the Individual Retirement Account. Only 11% of eligible Americans currently contribute to an IRA – according to IRS statistics. Combined with Social Security, all but the highest paid American workers (all but the top 10%, generally earning $130,000+) have had access to this fully tax advantaged retirement savings structure which, if utilized to its fullest extent, will replace 90+% of pre-retirement income.

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    1. I think you miss the point. It’s not what is available, it’s not what people can do, it’s what they actually do or don’t do. Clearly the opportunity is their. Human behavior is what gets in the way.

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      1. Absolutely agree regarding behavior. I agree that individuals should be defaulted into saving in an Individual Retirement Account – where they can opt out, and have one last clear chance not to contribute/participate when they file their income tax return. I have proposed such a solution, but, frankly, everybody wants someone else to pay. “Don’t tax you, don’t tax me, tax that guy behind the tree”!

        Why do you think it is a good idea to shift this burden from the individual to society? Perhaps you want to expand Social Security from its baseline target? You know, I am certain you know, that any such activity will lead to stupid vote-buying, a la Social Security 2100 and other proposals. We just had 85+ years of stupid vote buying for Social Security. You want more?

        For example, when initially adopted, the first Social Security payment of benefits wasn’t to occur until 1942 – 7 years after the bill became law and 6 years after taxation started. However, in 1938-1939 they amended the law to enhance and start benefit payments in 1940:
        – Adding benefits for wives, widows and surviving children,
        – Changed to the average monthly earnings calculation instead of cumulative wages,
        – Created the OAS Trust Fund, so as to reduce the tax burden (“prior law would have resulted in the accumulation of a huge reserve fund over the years, similar to the reserves built up by private pension plans” – changing to pay-as-you-go financing, postponing increases in Social Security tax rates scheduled for 1940).
        – Added the quarters of coverage qualification requirement.

        OK, say you do socialize the benefits of Individual Retirement Account savings and the contributions (like in a Social Security sidecar mandate) – so as to create a progressive system designed to replace 70%, 80%, 80% of 100% of pre-retirement income. Next, we’ll see vote buying for those folks who want to adjust Social Security benefits to pursue “justice” – a Diversity, Equity, Inclusion (DEI) initiative – adjusting benefits based on historical life expectancy and other factors (except, of course, not reducing monthly benefits for women or increasing their taxes despite the well-known, longstanding differences in life expectancy based on sex). See: https://www.urban.org/sites/default/files/alfresco/publication-pdfs/412943-Has-Social-Security-Redistributed-to-Whites-from-People-of-Color-.PDF

        Then, it will be some other stupid vote buying initiative. And, then another.

        Old proverb: “better the devil you know than the devil you don’t”

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