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The 3% Solution – Making Health Insurance More Affordable

Initiatives to fix the United States health care system will continue as our lawmakers hold on to disparate philosophies. One side of the aisle has offered proposals with “one size fits all” as the best solution. Minimal out of pocket exposure to obtain care and a future of waiting in line to receive needed services, unless life threatening, is certain to occur, similar to the government health care systems in Canada and Great Britain.

The other camp has promoted coverage customization based upon one’s anticipated need for services, along with requiring states to manage capped funds from the government to limit federal exposure to rising costs to help impoverished Americans.

Both approaches are problematic. Our culture will pay for instant results when it comes to health care, and quickly litigate if delayed access caused by rationing causes harm. Reducing premium costs by excluding health care services and capping amounts provided to states, foretells adverse selection and coverage gaps, as expensive services are excluded from insurance protection. Concerns will always exist about mismanagement of federal funds provided to states required to balance their budgets. Again, more suffering than under the Affordable Care Act as it currently exists.

When it comes to expensive, chronic health care, our country’s hospital and specialty physician infrastructure is the best in the world. It is also the most expensive. Borrowing from the passage of Medicare back in the 1960’s, a viable compromise is to adjust payroll taxes on workers and employers to pay for chronic, high cost care. Totaling 3%, split 1.5% employer and 1.5% employee, a projected $250 Billion is generated annually, stripping from private health care plans the cost of multiple chronic care needs.

The precedent for this type of consideration was part of original Medicare as treatment for Kidney Dialysis and ALS, a nervous system disorder known as Lou Gehrig’s disease, are to this day covered by Medicare for under age 65 Americans with these chronic illnesses. It was deemed then that employer plans could not afford the cost of paying for such chronic care needs. That truth exists in the 21st century for many more conditions, thanks to medical advancements over the past 50 years.

When considering costly care that includes organ transplantation, premature infant care, complex cancer diagnoses and treatments for other dreaded diseases, pooling these conditions through an increase to the current Medicare tax of 2.9% will drive down private health care premiums, making those costs more affordable for all American workers, while preserving a customized system for regular care needs such as normal child delivery, scheduled surgeries, emergency care, tests and prescriptions.

Since the federal government has a good track record negotiating Medicare discounts, this approach may be just the right compromise to balance cost and value, righting a ship that continues to take on more water. Its tax impact is also progressive, with the highly compensated paying more, something that President George W. Bush supported in 2003 when he signed the Medicare Prescription Drug, Improvement and Modernization Act, increasing the cost of Medicare Part B for higher income earning retirees.

If this concept ever becomes reality, expect the Affordable Care Act .9% additional Medicare tax for earnings over $200,000 to be revisited.

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