One Step Toward Affordable Healthcare for Startups (and the Rest of Us)

Last week I ranted about the Affordable Care Act’s failure to actually create affordable health care—for startups, freelancers or anyone else who doesn’t work for a big employer.

Today, I reveal my one-step strategy for making sure every American has health insurance. My plan will outrage critics on both the left and the right, which should tell you right away it’s a sound approach.

Ready? Here it comes:

The Federal government guarantees that American families never have to spend more than 10% of their annual income on healthcare. Period.

One Step Toward Affordable Healthcare for Startups (and the Rest of Us)HOWLS OF OUTRAGE

From the right: Are you nuts? That creates a new, staggeringly expensive entitlement that will turn the United States into Greece!

My response: You’re half right. It will be staggeringly expensive. But it will energize our economy, not cripple it.

From the left: Are you bonkers? That leaves hard-working American families exposed to big medical expenses!

My response: As opposed to now?

STIMULATED LIKE NEVER BEFORE

My plan will cost the government approximately $100 gazillion every year. But there’s no way to protect all Americans that won’t cost a bundle, and leaving millions uninsured isn’t a free ride, either. My plan, however, creates immediate, positive side-effects:

  • It encourages entrepreneurship, by removing the specter of higher premiums that people pay when they leave their corporate jobs—a long overdue boost for the startups and small businesses that create the biggest share of our economy’s net job growth.
  • It slashes the cost of employer-provided health insurance, by covering all claims over 10% of income. Premiums will plunge. Companies will steer those savings toward higher salaries, capital improvements, or straight to the bottom line.

One Step Toward Affordable Healthcare for Startups (and the Rest of Us)But wait! Aren’t these just basic economic stimulants? The government can’t just throw money at people and hope to grow the economy!

Well, the Bush-era tax rebates and Obama’s first-term stimulus package certainly proved that. But my plan isn’t just a stimulus—it’s the fairest, most transformative healthcare reform possible.

THE END OF HEALTH INSURANCE AS WE KNOW IT

I can already hear the groaning. Did he say “fair?” Heavens! A family making $50,000 a year might have to pay $5000 a year for healthcare!

Well, yes. But guess what? Some 17.7 million freelancers, contractors and other independents—13% of all working Americans—already face that risk. In fact, we pay budget-crippling premiums for the privilege. Or we go without insurance altogether.

In contrast, my plan is the definition of fairness—every American family gets the same protection relative to their income.

Of course, if you (or your employer) want to keep paying for a comprehensive health plan that covers 80% of everyday medical costs, no one is going to stop you. But without the threat of financial doom, my guess is that you’ll soon realize health insurance as we now know it is a waste of money.

I’ll say it again. Health insurance as we now know it is a waste of money.

One Step Toward Affordable Healthcare for Startups (and the Rest of Us)

Honestly, a comprehensive health plan isn’t insurance at all.It’s more like the extended warranty Best Buy tries to sell you on your laptop. You pay up front to cover the potential costs of routine maintenance or product malfunction down the road. It’s a sucker’s bet.

True health insurance doesn’t pay for basic medical costs, any more than car insurance covers oil changes or brake replacements. Insurance is for worst-case scenarios.

My plan gives every American true health insurance—a guarantee that a serious accident or devastating illness won’t bankrupt them.

ALL THAT, AND COST-CONTAINMENT TOO

So that’s the deal—a giant new government entitlement that:

  • Protects all Americans from financial ruin in a medical emergency.
  • Encourages the foundation of startups and other new businesses, like the ones that have created virtually all the net job growth in this country over the last 30 years.
  • Removes the unfair self-employment penalty on health insurance premiums.
  • Slashes employers’ healthcare costs, boosting productivity and profits.
  • Ends health insurance as we know it.

Oh, and one more thing. As more Americans leave comprehensive health plans and start paying out-of-pocket for basic medical expenses, my plan:

  • Reins in healthcare costs with competitive pressure, by exposing more Americans to the true costs of medical goods and services.

How will the plan be administered? How will we pay for it? I’ll leave those answers to the policy wonks in Washington. Or maybe to the editors at National Affairs, who wrote this in their Fall, 2012 issue:

“A sensible and affordable health-insurance system would thus be based on universal catastrophic coverage. The federal government could actually provide it to every one of the 209 million Americans who are not already covered by public insurance, and at a cost far lower than that of the Affordable Care Act.”

Picture credits: lifeplanningtoday.com, believeallthings.com, elitebranders.com
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2 thoughts on “One Step Toward Affordable Healthcare for Startups (and the Rest of Us)

  1. A few examples might help people understand…

    Husband and wife make a combined $100k – they would pay for regular doc visits, prescriptions, even a small surgery until they reached $10k or they would pay only if a single incident reached $10k?

    Pro football player, retired – made $20M during playing career, but now just makes money via investing. Are you basing his needs via his Income Tax Statement from the previous year?

    Single working mom – makes $40k with 2 kids – her child gets sick, they don’t know why, has test after test run, no clear diagnosis. Does she stop paying after $4k?

    So if we agree healthcare costs are overly inflated 100% due to health insurance, let’s assume 100% inflation – actual costs are only 1/2. Do we raise taxes/cut spending to pay for everyone when people hit their 10%?

    • The plan I describe is essentially a “high-deductible” plan. You pay all costs (a little at a time or all at once) until you hit your limit, and Uncle Sam pays the rest.

      Setting the actual limits would be a little more complicated than just drawing a line at 10% of gross. Unfair, obviously, to burden the single mom with the same deductible as a childless 23-year-old with the same income. There would probably be exceptions and deductions, just like the tax code — not to mention rules that prohibit millionaires from declaring miniscule incomes while their net worth balloons. Not that the tax code is perfect or even a good example, but there are ways to iron this stuff out.

      Finally … if this plan were to actually cut healthcare costs by 50%, the resulting explosion in personal and corporate incomes would easily generate enough tax revenue to cover the plan’s costs. Unfortunately, it probably won’t be that easy.

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