Why life cycle health insurance?

In the recent years, health care has been a hot political issue. Much more than many other contentious political issues, health care is very intimate for all of us, as earlier or later we all will need some medical assistance, and we want to get the best at affordable cost.

It is banal to say that the current system of health care in the U.S.A does not work. Americans cannot agree why it does not work; they disagree on how to fix it as well. For some, health care is just a service that we buy similarly as food or housing. For others, it is an inalienable right that society should provide unconditionally to everyone, similarly as education.

Even if people can agree on this very divisive issue, they face the next step – what is the most efficient way to provide health care? Some believe that all Americans can have fair access to medical services only if government manages the key components of health care sysytem. Others, quite opposite, believe that we all can have better access to essential for us medical services when they are provided by the private sector, with very limited regulatory only role of the government.

Every of these arguments have some valid points. However, a sharp-eyed observant of debates about health care can easily notice that too often opinions are based on ideological preferences, on preconceived notions of the debaters, not on the calm analysis of facts.

To make things even more entangled, most of Republicans strongly oppose to “The Patient Protection and Affordable Care Act”, often known as “ObamaCare”, but among themselves they cannot agree on a viable alternative.

Confused and frustrated with all the political canvassing, I decided to study the issue from the beginning and to form my opinion on facts that I can find, and verify. This website documents my search for the truth about health care. Please follow my steps, verify my facts and logic. I concluded that we need life cycle risk insurance. Please verify my deductions, please add yours.

The problem

• An individual is interested in health care for the length of his or her life, not in yearly health insurance contracts. Hence, any workable solution needs to offer lifespan coverage.

• An individual is mostly concerned about major health failures. Hence, any workable solution needs to focus on catastrophic coverage.

• Young and healthy people tend to not buy health insurance. However, without their contributions no health insurance system can work. Hence, a workable solution needs to have provisions such that a majority of young and healthy Americans would buy health insurance of their own free will.

• Only after addressing the above issues, we can implement the free market mechanisms suggested in many proposals presented by opponents of the public option. In particular:

1. Individual ownership of insurance policies. There is no reason that health insurance should be chosen and paid for by an employer.
2. The freedom to buy health insurance across the state borders.
3. Curbing frivolous lawsuits by reforming tort liability laws.

The Solution

• The core of the system should be life-cycle health risk insurance, covering expensive treatments and end-of-life care.

• This insurance would step in and cover expenses above some predetermined per-year limits, cumulative limits for consecutive years, and cumulative limits over the person’s lifetime.

• This insurance should not be mandatory. However, people buying this insurance should have hefty tax breaks so buying this insurance would be common.

• For covering minor medical bills, individuals would use the current system of health maintenance plans, Health Savings Accounts, or would pay out of pocket.

• Poor people would use Medicaid as they do now.

• Lifespan health risk insurance would accrue cash value. The government would guarantee this value using instruments similar to those used when guaranteeing the safety of bank deposits.

Fixing The Current Mess

• The health insurance industry needs to be told plainly and boldly that offering life-cycle health risk insurance is the only possible alternative to a government run health care system.

• Those people who currently have health insurance would, at the contract renewal, have their current policy split into two policies: a non-cancelable lifetime-long health risk insurance, and a yearly health maintenance plan.

• When signing-up those presently uninsured, insurance companies will face various risks. A one-time adjustment needs to be negotiated into the start-up of this system.
• Life-cycle health insurance plans, in order to operate, need some cash resources that would accumulate gradually, but will be not available at the beginning. Some one-time government assistance might be needed to start this system.

• A legal venue should be opened for seniors to migrate voluntarily from Medicare to the private insurance plans. Eventually, this should lead to lowering the burden that Medicare puts on the Federal budget.

Problems We Will Face

• There always will be neglect and irresponsible individuals opting out of the system. If at the time of their health failure, out of compassion, they would receive the same care as people contributing to the system, then we will encourage more individuals to act irresponsibly.

• Life-cycle health risk insurance would resolve the hot-button issue of pre-existing conditions. However, being in its essence catastrophic insurance, it would leave as an issue the pay structure for minor chronic illnesses, those that would not trigger life cycle health insurance, but still could be an unbearable burden to a person of moderate means.