Solve Healthcare

Healthcare in the United States lacks choice. And Americans are paying the price of that with their wallets and their own lives. Why is it that with technology, as time progresses, they get better and/or cheaper. Competition amongst individuals and organizations leads them to create products that are cheaper and more innovative. Why is it that with healthcare, as time progresses, that prices only go up and quality of service is the same or worse. This industry lacks choice. Let's look at another industry, car insurance. According to Geico, “Mechanical breakdown insurance offers coverage for breakdown-related auto repairs when your manufacturer's warranty expires or fails to cover mechanical failures.” This insurance can be bought to cover the expense of an unforeseen mechanical failure. This plan does not cover oil changes, tire replacements, and other regular maintenance. Why doesn't it? Car insurance companies don’t cover oil changes or other routine maintenance because these services are predictable, regular expenses that car owners can manage on their own. Insurance is fundamentally designed to cover unexpected, costly events that could cause financial strain, like accidents or major mechanical breakdowns, rather than predictable, low-cost maintenance. Covering every oil change, tire rotation, or brake pad replacement would lead to higher administrative costs and premiums, as insurers would need to process and manage small claims constantly. With an oil change, we can see upfront pricing on the companies websites. Competing oil change companies, trying to win over customers, provide amenities (complimentary Wi-Fi, popcorn, coffee, etc.) and coupons. With this information, people can shop around, see what service meets their needs best, and then purchase a service. Why is healthcare not like this? When the United States entered World War II, businesses struggled to attract the workers they needed, as 11 million Americans were drafted, and the government had imposed strict wage and price controls to curb inflation. These regulations prevented companies from offering higher wages to attract additional workers. However, businesses found a workaround by providing medical insurance as an employee benefit, which the government did not classify as a wage increase. This loophole meant employer-sponsored health insurance was tax-exempt, creating the tax exemption policy that continues to incentivize employer-provided healthcare today. Today, employers don’t have to pay payroll taxes on the dollar value of the health insurance they provide. So, instead of an employee earning $100,000 in cash compensation, they might receive $80,000 in cash and an additional $20,000 as a health insurance benefit. This setup incentivizes employers to allocate funds toward health insurance—often at inflated prices—to make the total compensation appear as $100,000. Since the $20,000 in health benefits is not subject to payroll tax, it reduces the employer’s tax burden. Ask yourself, do employers give a better deal on insurance for employees? If so, why don’t employers provide car or housing insurance? It is because there are no tax deductions for it. Insurance means to cover significant, unexpected, and financially burdensome events, like accidents, or major health crises. It’s there to protect against the financial impact of unforeseen events, like a flood or a fire. Health “Insurance” now covers everything: doctor check ups, shots, x-rays, acupuncture, massages, etc. All these services are non-emergency and are planned to be used by people. And since these services are covered by insurance, demand skyrockets (because why waste your benefits if you already had them taken out of your salary?) causing prices to skyrocket too. This has a negative effect on lower class citizens as they can no longer pay out of pocket, due to supply of services being bought out by insurance companies. Another way insurance is made expensive is due to pizza toppings. When you order a pizza, you get to add your own toppings. Say you want a pizza with pepperoni. It’s going to cost you $12. Wait, you change your mind! You want extra pepperoni with mushrooms. That will bring your total to $14. Extra toppings raise the price of your pizza. Now imagine the government said that every pizza had to have a minimum of 50 toppings, imagine the price of that pizza! That is what state and federal governments do, but with healthcare. The “Affordable” Care Act (ACA) required at least ten different “benefits” that every policy must have. These are the ten mandated pizza toppings you have to pay for, no matter if you like them or not. And in addition to those, each individual state mandates their own “benefits” for each policyholder to pay for.  You don’t need acupuncture? Well, you still have to pay for it. This is the equivalent of an electric car paying for the oil change of a gas car. In addition to this, the Affordable Care Act's rules that insurers (private ones too) must spend at least 80 percent of premiums on medical care, this incentivizes higher spending. Insurance companies are allowed to collect the remaining 20% to cover administration, expenditures, and PROFIT. If healthcare costs go up, the insurance companies can justify raising premiums to cover those higher expenses. So, if an insurance company pays $70,000 for a hip replacement, it means higher premiums, but also a higher dollar amount for its profit slice. It’s like a kid being told he can only eat half of the ice cream in the bowl—but the bigger the bowl, the more ice cream he gets. This setup encourages insurers to welcome higher healthcare costs, since they make more money from larger premiums, rather than keeping costs low. This is why healthcare is so expensive.

Potential Solutions:

> Remove any required benefits criteria from healthcare, including preventative care.

> Make it illegal for states to require certain benefits for policy holders.

> Eliminate tax incentives for companies to provide healthcare benefits directly. Instead, employees should have the option to choose between the employer-provided healthcare plan or receive an equivalent, tax-free cash sum that they can allocate as they wish—including, if they choose, for healthcare expenses. 

> Remove Incentives for Inflated Healthcare Spending, such as the ACA 80/20 rule.

> Allow people to opt-in/opt-out of Medicare and Medicaid.

Impact:

> Removing required “benefits” from policies would reduce the price of what citizens want to actually pay for. 

> Removing tax incentives for company sponsored healthcare would make people more diligent on how their money is spent, not spending money on whatever new healthcare there is,  just because insurance covers it.

>Both of these would create pricing transparency. With the choice to pay out of pocket for non-emergency procedures, the cost of a check-up, flu shot, X-Ray, etc, would fall tremendously. People can now shop around, see what service meets their needs best and at what price, and then make a purchase. This would create a competitive market among non-emergency doctors/providers, ensuring customers are top priority and not insurance companies. The same exact thing people do today when buying a car, food, phone, airline tickets, clothing, and literally everything else in life. 

> This would also reduce the cost of buying actual health insurance (the one that covers emergency situations). Reducing the required “benefits” would reduce what insurance companies must cover, ultimately reducing what the consumer has to pay for.

> Removing the incentive for insurance companies to jack up prices would, well, get rid of the incentive to jack up insurance prices.