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Modest Amendments to Public Health Care. - Comments (0)

Printer Friendly Category: Articles,Salt and Light
Author: John Malone
Date: 16th February, 2014 @ 10:10:47 AM

I’ve added a new category to this site to accommodate some of my thoughts about public policy that I think make for a more peaceful and productive society. The kind of society we should pray for so that we can more readily advance the gospel of Jesus Christ. Christians are the salt of the earth , a preserving agent, and we need to function accordingly, lest the surrounding society rots faster.

There are approximately 4,000,000 children born in the USA annually. The average cost of a birth is $3,500, which in my opinion is pretty high because my daughters and daughter-in-law give birth for a little as $50. And I have 36 grandkids.

If vouchers were given to every child born in the USA as a birthday present, it would cost $14B. That’s a drop in the bucket in the context of the Affordable Health Care Act, and would remove some of the ridiculous underwriting requirements involved in that fiasco such as providing maternity coverage for all males.

Insurance NEEDS underwriting requirements.

It would also lead to the reduction in cost of births because it would stimulate competition for birthing. Pregnancy is not a disease and doesn’t necessarily belong in hospitals in the first place. I’d let parents shop the birth so that any remainder of the voucher would go to an HSA for the child.

One of the main problems with insurance is that it tends to destroy price discovery by the consumer. The provision of leftovers into an HSA will stimulate consumer price discovery, which in turn stimulates competition, which in turn provides efficiency.

I don’t think we can have too many more justifiable public expenses than birth. $14B would take maternity out of the public health care insurance debate.

Happy birthday, citizen.

The second thing that needs to be done is to restore the allocation scheme of “uninsurables” so that insurance providers can more accurately price products without worrying that they will be “selected against” by high-cost consumers. As it stands today, each participating insurer in public health care has to worry about such selection – a standard practice in insurance – and price accordingly. It is possible as it currently stands, for instance, for 10 insurance companies to each price their products as if they will attract 25% of the high-cost consumer. Normal distribution of those 10 would yield one company with 25%, and two with 20% of those consumers, but ALL the companies have to price for the eventuality.┬áThat adds up to 2.5 times the number of those consumers, or 150% excess expense. I have oversimplified, but the idea is here.

Instead, companies should be allowed to underwrite as they have in the past, but me made to absorb the uninsurable according the the market percentages they acquire. A simple allocation scheme. Such a simple provision as this would allow more accurate pricing by insurers of the base product. The uninsurable would raise the price of insurance for the insurable , but that is what insurance is, after all.

When these sorts of simple ideas are not present in the scheme, one wonder what the scheme really is.