Universal Insurance

This plan is a simple, yet complete, approach to understanding how universal health care can be available on demand to every American. No one will be turned away. No one will have to come up with one dollar to receive medical attention and services.

It's called insurance. Insurance allows you to share the risk of an unexpected, even a catastrophic event. Just like property insurance, it protects you. Whether your house is a total loss, or just one room is destroyed by fire, your financial loss is taken care of.

Sharing risk requires many people to pool money in advance. The manager of the pool of money dispenses money, not miracles nor cures. Yes, this plan is really, really simple. Let's start with a simple story to explain.

"Susan visits a doctor who charges $50. The doctor orders an x-ray which costs $50. As an insured American (regardless of age), Susan does not have to come up with any money. Susan gets a statement and her insurance administrator pays all of her bill of $100. To her, it's free. She has medical security insurance like every American."

Your Benefits

Life can be easy when the great burden and worry is lifted from your shoulders. The benefits of medical security are the following:

• You are covered from birth to death.
• Your savings account belongs to you. No medical expenses? No payments from your account.
• You will never be turned down for insurance.
• You will never lose your health insurance.
• You can switch jobs freely without losing coverage.
• You never have to write a check for treatment.
• You could lose your job and income and not lose your medical security for lack of money.
• Your "pre-existing" conditions don't matter anymore.
• You always get to choose your doctor and other providers.
• You would never be forced to switch doctors based on insurance.
• Your employer is out of the picture and should be delighted to dump the burden.
• Medical security relieves you of the stress of financial insecurity; the relief is itself a health benefit.
• You own the coverage regardless of employment, divorce, bankruptcy, and so forth.
• Your job prospects, as you get older, are better as employers won't have to pay higher premiums for you.
• Your health insurance premium remains the same even as you get older.

WHAT ARE THE NUTS AND BOLTS?

This is what makes this plan innovative and unique. Here's the the breakdown of how this medical security insurance works. In other words, where does the money come from and where does the money go?

REVENUE Into the Plan

A) Premium : Monthly amount for life. (Typically, an automatic transfer from your wages, investment income, etc.)

B) Savings : Monthly addition to your medical savings account. (Typically, an automatic transfer from your wages, investment income, etc.)

C) Earnings: Monthly interest income on the deposits in your savings account.

EXPENDITURE From the Plan

1) Benefit: Paid from the shared insurance pool. (Example: 80%.)

2) Co-Pay : Share paid from the savings account. (Example: 20%.)

3) Shortfall Options for the Co-Payment:

• a) Transfer "other" money into your savings.
• b) Borrow from an automatic line of credit. The loan money comes from policyholders who have cash in their savings accounts.

Indeed, health care costs money. Everybody must contribute. People who work for their income must pay. Rich people who live on stock dividends, bank interest, and/or rental income must pay for their insurance, too.

WHAT IS DIFFERENT IN THIS PLAN?

The special, unique feature in this plan is that people who have no "medical savings" still get "free" treatment. Imagine that Susan above has just started working and has little money in "medical savings". If she got hit by a $10,000 hospital bill, she would receive an automatic loan for the co-pay from the insurance pool. A healthy Susan can resume work and continue paying the same premium. Her savings portion would go toward getting rid of the negative balance in her "savings" account. Remember, the true insurance portion would pay the biggest portion. If that percentage is 80%, then it would pay $8,000, and Susan would have $2,000 as her share. At the moment of treatment, she would not have to come up with one penny out of pocket.

Here's a dramatic true story regarding a poor woman on welfare income and benefits in England. She was absolutely broke and didn't have any income. She wrote books for some time. Imagine that she had won millions in the Irish Sweepstakes. Wouldn't it be fair for her to repay the money and benefits she had received? Of course. As it turns out, her name is J.K. Rowlings. She is the author of the Harry Potter series. J.K. Rowlings became the richest woman in England, even richer than the Queen, who is now the second richest.

The payback of any medical savings loan is the unique feature. If there were no payback, it would look a bit like a welfare giveaway. Or, the price of the premiums would be higher.

Finally, each dollar spent will cause Susan to know that HER money is also being used for every medical procedure, treatment, and expenditure. Thus, each person has an incentive to watch out for unnecessary or wasteful costs as well as simple billing mistakes and fraud.

HOW MUCH DOES THIS COST?

Medical security must have a cost model that fits the annual income of the average working person in the United States. That income is $25,000 per year. One commercial health policy has a premium of $100 per month for a middle-age person. It has a deductible and a co-pay, of course. To get rid of the deductible, the proposed plan adds the "medical savings" portion. An estimate is that it would add $50. Thus, the total monthly amount is $150, or $1,800 per year for a basic, but comprehensive, plan. By the way, it would be an automatic deduction from payroll for most.

This plan creates the foundation and the structure. As time passes, of course, costs change and the demand for new and additional coverage will surely change. New technology, for instance, may lower some costs, but increase others. However, those adjustments are easy to make within the structure of this universal plan.

One way to make the start-up easy is to use the tax money now paid by everyone on the first $25,000 of income. Give each person a cumulative annual income exemption to pay the insurance premium.

WHAT HAPPENS TO MY SAVINGS PORTION?

You could be a person who simply never gets sick and never has any medical expenses. Let's say you work from age 20 to age 65. If the interest rate is set at 6%, then the value of your $50 monthly contribution would become $138,451 at age 65. A couple of things might happen.

You would still be obligated to pay for insurance as long as you live. That lump sum could be used as an automatic monthly payment. If life expectancy were 85, the average person would, after continuing to pay all premiums from the savings portion, still have $390,000. So imagine that it was required to leave $100,000 in the savings account. Starting at age 65, you could still start withdrawing $8,000 per year and not touch the $100,000.

Or, imagine that you need to move into assisted living or you might have to buy nursing home care. One could design a system that allows your savings account to be directed to that purpose. Remember, if absolutely nothing is done with the savings account, it grows to $390,00 by age 85.

In the extreme, if that 65-year old person has a fatal heart attack, then all of that money belongs to the estate and would be passed to the person's beneficiaries. The estate takes the entire amount even if a person were to die younger or older.

This very substantial medical savings is also why this plan can replace Medicare.

WHAT HAPPENS TO EMPLOYER-BASED INSURANCE?

It's gone. An employer would be entitled to contribute money and/or increase wages. However, the employer would no longer be burdened with running an expensive benefits bureaucracy. This is one reason many small businesses don't offer any health insurance to their employees. Small businesses can't stand the overhead of paying a benefits department. Most of what a "personnel", or HR, department does is run the benefits program.

The moral is, "Get American business out of health. Let American business do what it does best."

Finally, this plan does not put health insurance companies out of business. It does not prohibit a "single-payer" organization from taking over. The plan is to fund the same medical security for everyone. Who manages it is not the issue. That's another reason why this plan should be widely accepted.