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IT’S A GRAY AREA:

Without any question, the healthcare system in our country is not working.

Before the 1960s, the United States had one of the best healthcare systems in the world, with regard to quality and cost. But slowly the government started taking control of the system, with demonstrably disastrous results.

And now there is serious talk about having “Universal Health Coverage” or a “One-Payer System,” etc. that would be controlled by the government. How in anyone’s mind can a government that has a record of uncontrolled spending take complete control over healthcare decisions? If you think healthcare is expensive now, wait until it is free.

Those able to take care of themselves should be allowed to negotiate with healthcare providers and insurance companies in the libertarian way, completely free of the influence and mandates of government. This will directly bring up the quality of healthcare services and lower the costs.

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The best way to take advantage of market competition in the healthcare field would be to combine the use of “medical savings accounts” along with required catastrophic insurance coverage. Unfortunately, today the common wisdom is for programs of this kind be funded by employers. If the system drives up the cost of labor, many people will not have medical coverage or a job!

This alternative program would have adults pay for health insurance with a $5,000 deductible for themselves, and a $2,000 deductible for their children. Then those deductible amounts of money would be placed by that person into a medical savings account, which would be used for medical expenses solely at that person’s discretion. Importantly, this will give patients an incentive to find the most appropriate and cost-effective services necessary for their particular medical situation. Payment for the services would be made directly to the healthcare provider by the patient by using a form of debit card to access the funds in that patient’s account.

Studies show that the average adult in our country spends about $3,000 per year for medical expenses, unless that person has some form of catastrophic medical problem, and it costs less for most children. Of course, if there were a serious medical problem the insurance coverage would be utilized.

The costs of healthcare would be materially reduced by marketplace competition. Administrative costs — billings to insurance companies, delays and fraud — would drop. In fact, 31% of today’s $776 billion in medical insurance coverage payments is for administration and profits of the insurance companies.

The public would receive more competitive rates for their catastrophic insurance coverage. In addition, they could select the most cost-effective medical treatments, and “roll over” the excess amounts each year into an IRA account.

The better-run insurance companies would have greater freedom to experiment with the types of competitive plans they offer for catastrophic coverage.

So for the people who could take care of themselves, the price of healthcare would come down, and the quality would go up.

There will always be some, however, who can not pay for their medical needs.

My suggestion for those who cannot afford their own medical protection is a government system of medical clinics and hospitals providing care directly or by private contract. A small co-payment for visits would be required, but could be waived if necessary.

For years this approach has been denigrated as “socialized medicine.” But this approach has worked well for decades in our military services, and maybe they, along with Veterans Affairs hospitals, could be combined with these new proposed facilities. In addition, today some private groups provide similar medical coverage to patients who voluntarily enroll, and most patients are content with the services. And many fine doctors are happy to be unencumbered by administrative limitations. In addition, the doctors would have much more of a private life, as they wouldn’t be on call as often.

Under this system most of the money would be spent for doctors, nurses, hospitals and medicines, and not for administration, bureaucracy and fraud. This system should address everyone’s issues far more beneficially and economically than any other. Finally, what about those people in between? Well, in the first place, if the costs to employers to hire their employees, and the costs of health insurance and medical services are reduced as set forth above, this middle group of people will shrink substantially. So more of the people who are now “in-between” will join the first group. But the ones remaining should be required to make an appreciably larger co-payment when they go to these facilities for services based upon their income.

Our healthcare system will never regain its prominence until it is revitalized by the system of innovation and competition that made it great in the first place.


JAMES P. GRAY is an Orange County Superior Court judge and author of the book, “Why Our Drug Laws Have Failed and What We Can Do About It — A Judicial Indictment Of The War On Drugs.” He can be reached at [email protected] or at his blog site at www.judgejimgray.com.

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