MEDICARE – MEDICAID & NOW MEDICHAOS?
Nov 12, 2009
The health reform debate has become increasingly delusional or devious! So, the premise is that we will give 48 million people enhanced health coverage that typically costs an employer close to $10,000 annually, for free, and it will not increase the deficit. It will all come from internal savings and taxing the rich!
We now have 38 million senior citizens and it will grow to over 80 million with extended lifespans. Since it now costs the government close to $30,000 annually per retiree for Medicare and Social Security benefits, what will it be in 2020? $60,000 or $75,000 annually?
Added to all this, we are not competing well in a world economy. We are suffering with double-digit job loss, bailout deficits are skyrocketing, Medicaid is breaking state budgets, Medicare is in serious danger and we face a national obesity crisis. Despite all this, Congress proposes to mandate higher medical benefit levels and eliminate pre-existing condition restrictions and medical underwriting, which while laudable, will drive up insurance costs.
The health reform debate is not really about any type of health care cost controls, but rather a long pent up belief within the Democratic Party that health care is a right of every person in America. Let’s cut through the nonsense and put it up for a national referendum, whether America wants to embrace a single payer system or not. So what happens if it’s voted up or down?
If Americans vote for a single payer system as a human right and national obligation, then I believe we should create a straight-line supplemental tax on all Americans to cover this cost. By this I mean a flat percentage of the anticipated additional costs should be charged against all income levels, as it will obviously be much smaller at lower income levels and higher at upper levels. The benefit and cost-sharing model should be that of Medicare, which does require individuals to purchase supplemental benefit coverage.
If America votes down a public plan, we are then faced with our continuing cost escalation, and realities have to be addressed. First of all, let’s revisit what insurance is supposed to be versus what it has become. Insurance is a product under which we pool risk, and then people take a small loss, in the form of a premium, to cover unexpected catastrophic expenses. This works in the property casualty market, automobile and homeowners insurance that have higher deductibles, but it’s not acceptable in health insurance. We’ve converted health coverage to a first dollar benefit entitlement, and since employers pay 75 percent of the cost for health care, many people are insulated from the costs and inturn over utilize the benefits.
What we need to do is change the paradigm in which health insurance is perceived to be the obligation of the employer into a partnership with the employer, who would be required, or incentivized, to provide coverage for catastrophic expenses but with substantially higher deductibles. The employees then would be offered for individual purchase, a range of indemnity benefits on a fully insured basis to cover out-of-pocket expenses in front of these higher deductibles on a tax-deductible basis. This partnership will result in employers being willing to continue to provide large claim protection but at manageable cost levels. Employees inturn receive what they prefer, which is freedom of choice and can acquire first dollar medical protection options, as well as a full venue of ancillary benefits such as dental, vision, critical illness and disability coverage.
America has to go on a health insurance diet! The fact is that first dollar benefits, low copays and unlimited benefits are the disease. Even organized labor must realize that rich benefits are taking away money from things like take home pay and savings for retirement, especially when one realizes the extended life expectancy Americans should enjoy in the future, as they may run out of money before they run out of time.
Being in the employee health business for over 35 years, I have seen repeated and convoluted efforts to control cost that have failed at both state and federal levels, and see the reform efforts being proposed having little chance of being effective. The time has come for commonsense alternatives, not 1,990 pages of legislation that few can understand or embrace.
George V. Duczak is President of The American Worker Plans, Inc., which was specifically created to develop alternative health and employee benefit plans with its’ exclusive focus on working Americans The company has exclusive national contracts with numerous national carriers to provide a variety of both limited indemnity and medical plans as well as supplemental benefits available on a national basis.
The company does not do any direct selling, and its distribution is exclusively through its national network of Managing General Agents, General Agents and Producers.
Previously, George was a principal at National Hospital and Health Care Services, one of Illinois’ largest direct selling managed health care employee benefits firms, from 1989 to 1999. In 1999 the company was sold to a national organization.
Prior to that George was Chief Marketing Officer of United Chambers Insurance Plans from 1985 to 1989. From 1979 to 1985 he was Vice President of Marketing at Dunn & Bradstreet Plan Services.
Previously, George was involved in personal production in both the health and business areas, and individual estate planning.
George is an active participant in a number of insurance related associations. He is a frequent speaker at managed care, health care reform, worksite and direct marketing programs.
Before starting his insurance career in 1970, he was in the U.S. Army having served in Viet Nam, Italy and Germany, principally in field advisory roles.
George attended the University of Wisconsin, University of Vicenza, Italy, and the Armed Forces Institute. He resides in Barrington Hills, Illinois.
George V. Duczak
President
The American Worker Plans, Inc.
33 W. Higgins Road, Suite 910
South Barrington, IL 60010
george@theamericanworker.com
