STATE SPONSORED HEALTHCARE REFORM

Kenneth Berwick

The Affordable Care Act (OBAMA-CARE) has been very helpful to many US citizens.  However, the taxpayer cost to implement this act will increase by nearly a trillion dollars over the next ten years. The Affordable Care Act doesn't appear to be affordable.  A better way to proceed is to allow each state to design their own healthcare plan.
       

      Each state in the United States can design a healthcare plan that will lower its healthcare insurance cost.  This can be done because each state regulates the insurance industries that do business within their borders.

First, the high cost of preexisting conditions and catastrophic health care problems has to be solved.  State funding to help reduce this high cost can be raised by using the vehicle liability insurance industry.  In each state, private individuals, families, private companies, the state government, local cities and towns, the federal government and other government agencies buy liability insurance for the vehicles they own.  The number of vehicles involved (cars, trucks, motorcycles, RV,s, trailers, etc.) is huge; probably equaling each state's population.  In Rhode Island, for example, there are probably a million vehicles with liability insurance. 

Rhode Island could require each vehicle liability insurance company doing business in the state to put a yearly $100.00 surcharge on each insured vehicle.  This surcharge would raise over one hundred million dollars each year in Rhode Island that could be dedicated to help cover the cost of preexisting conditions and catastrophic health care problems. Each liability insurance company would immediately deposit these surcharges in a selected Rhode Island banking institution in order to draw as much interest as possible. (Because vehicle liability insurance companies are highly competitive, the cost of an average liability policy would NOT go up by $100.00.)  Only individuals who have healthcare coverage (state or privately sponsored low cost clinics, Medicare, Medicaid or private health care insurance) would be able to access the above mentioned funds.  

Rhode Island could further require tort reform, letting all healthcare insurance companies compete for Rhode Island's insurance needs, allowing companies to join together to reduce their insurance costs, allowing healthcare savings accounts and allowing individuals to deduct 15% of their healthcare insurance costs from their state and federal   income tax returns. 

Each healthcare insurance company would also be allowed to offer a variety of plans, (from a basic low cost plan to an all inclusive high end expensive plan) that fit the needs of the buyer.  In addition, the Federal government would be encouraged to provide no strings attached healthcare block grants to each state, based on each state's population, to help cover the costs of clincs,   Medicaid, low income children's healthcare insurance and Medicare. 

Once the above requirements have been implemented, the cost of a regular healthcare insurance policy would be  reduced and all large businesses and many small businesses would be able to offer healthcare insurance to their employees and most other working Rhode Islanders   would be able to afford to buy a regular healthcare insurance policy that fits their budget needs.   

The 100 dollar surcharge on vehicle liability insurance poliycies will be a drop in the bucket when compared to the huge reductions in the cost of a typical healthcare insurance policy provided to RI's state and local government employees.  A $1,000.00 yearly reduction per policy would save Rhode Island taxpayers and private business owners million of dollars every year.  A private company or local municipality with 500 employees and 200 vehicles would pay $20,000.00 in liability insurance surcharges on their vehicles and save $500,000.00 on their yearly healthcare costs.    

Medicare costs would be reduced (many elderly have preexisting conditions and catastrophic health care problems), Medicaid costs and low income children's insurance costs would be reduced (many low income   families and individuals will be able to buy affordable, high quality regular healthcare insurance) and the number of uninsured residents in Rhode Island would be extremely low.  Almost all residents of Rhode Island would see the value of buying a healthcare insurance plan that fits their budget needs.  This would greatly increase the amount of money that each healthcare insurance company has   available each year to pay for their healthcare costs. This would also allow each healthcare insurance company to reduce the cost of each healthcare plan they offer.  Healthcare insurance companies would be competing for business just as Geico and Nationwide auto insurance companies compete for vehicle liability insurance business. 

The money that companies save could be used to expand their businesses and the money that the state, cities and towns save could be used to lower their tax rates. In addition, most private companies would have the funds to expand, hire more employees and begin to lower   RI's unemployment rate. 

State designed healthcare plans are better because, if some part of the plan is not working, the state legislature can easily amend the plan.  The gridlock now in place in Washington will not allow any changes to be made in the Affordable Care Act.   

                

Ken Berwick