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Mosler Health Care Proposal

Posted by WARREN MOSLER on March 2nd, 2009


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Mosler Health Care Proposal

  1. Government funding for a full time, $8 per hour job that includes full federal health care coverage for the worker and dependents.

    This immediately triggers market forces that will result in all businesses providing health care benefits as a matter of competition.
  2. As a matter of economics and public purpose it is counter productive for health care to be a marginal cost of production.

    No economist will disagree with this. Unless going to work makes one more prone to needing health care, making the cost
    a marginal cost of production distorts the price structure and results in sub optimal outcomes.

    Therefore government should fund at least 90% of health care costs paid for by businesses.
  3. Long term vision subject to revised details:
    • Everyone gets a ‘medical debit card’ with perhaps $5000 in it to be used for qualifying medical expenses (including dental) for the year.
    • Expenses beyond that are covered by catastrophic insurance.
    • At the end of the year, the debit card holder gets a check for the unused balance on the card, up to $4,000, with the $1,000 to be spent on preventative measures not refundable.
    • The next year, the cards are renewed for an additional $5,000.
    • Advantages:
      1. Doctor/patient time doubled as doctor/insurance company time is eliminated.
      2. The doctor must discuss the diagnosis and options regarding drugs, treatments, and costs with the patient rather than an insurance company.
      3. Individuals have a strong incentive to keep costs down.
      4. Doubling the time doctors have available for patients increases capacity and service without increasing real costs.
      5. Total nominal cost of approx. $1.5 trillion ($5,000×300 million people) is about 10% of GDP which is less than being spent today, so even when catastrophic costs are added the numbers are not financially disruptive and can easily be modified.
      6. Eliminates medical costs from businesses, removing price distortions and medical legacy costs.
      7. May obviate the need for Medicare and other current programs.
      8. Eliminates issues regarding receivables and bad debt for hospitals and doctors.
      9. Eliminates the majority of administrative costs for the nation as a whole for the current system.
        Patients can ‘shop’ for medical services and prices as desired.
    • Disadvantages: Those more in need of the rebate at the end of the year may elect to forgo treatment beyond the $1,500 not subject to the rebate.
    • Doctors may be able to more easily convince patients of unneeded treatments and expensive drugs vs insurance companies.


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48 Responses to “Mosler Health Care Proposal”

  1. Dave Begotka Says:

    The health care industry has got a leach on it just like the monetary system has the FED, it’s called the Insurance Industry.

    I recently saw a pole of doctors that said over half wishes they would have chose a different profession.

    The cost of schooling is stopping many skilled people from entering the field also.

    Reply

  2. RichW Says:

    Yea, insurance industry is just needless friction to the delivery of health care. It’s not “insurance” anyway. It’s just third party payer.

    I can’t understand why our current system continues to have support among the public.

    Reply

  3. manny valesco Says:

    Congress is what 80% lawyers, how would they live so high without ambulance chasing? You don’t really expect them to blow up the legal/insurance industry that is thier lifeblood do you?

    Sending warren to washington would be a waste, either he would be corrupted or marginalized. Why isn’t he talking about changing the system that crushes good men into greedy crony pigs?

    Warren I want to follow maslow’s hierarchy, I want to do big great things that take 20 years of study maybe – biotech research to give us all immortality and make your heart beat 100 years. What about free healtcare for students? If I have to go work picking strawberries to get that free healthcare you are talking about – I am left with no choice but to put down my biology textbook and go into the strawberry field.

    Reply

  4. warren mosler Says:

    I am left with no choice but to put down my biology textbook and go into the strawberry field.

    I KNOW, FOREVER…

    Reply

  5. Dave Begotka Says:

    More proof how bad it is out of controll! Ever heard of the Gulf of Tonkin? Here it is all over again only NUCLEAR!

    http://www.youtube.com/watch?v=NTFaMK2dvzg

    We have to stop the STUPIDITY

    Reply

  6. Larry Carty Says:

    Your $5,000.00 debit card is similar to medical savings accounts. Would you entertain the idea of medical savings accounts funded by tax credits, not deductions? This way the money is seen by the tax payer as keeping his own money and not receiving something from the government. A new government department to account for the debit cards would not be necessary, the IRS will do the accounting. Also, they will have the full $5,000.00 every year not $4,000.00.

    You mention the purchase of catastrophic insurance, I presume it will be purchased from insurance companies, no? Will the insurance companies be allowed to sell across state lines?

    I have listened to recordings and watched videos by you and never have I heard you speak on the health care issue, only finance. I think the number one topic now is health care would you speak to that issue the next time you are speaking publicly?

    Ciao Larry J.

    Reply

  7. Floccina Says:

    http://un-thought.blogspot.com/2009/09/healthcare-compromise.html

    My Health-care Compromise
    It is a compromise between advocates of government provided health insurance and those against:

    The state would provide insurance to all Americans but the annual deductible on the insurance would be equal to the family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300…

    Reply

  8. warren mosler Says:

    My proposal is also designed to help prevent abuse of the system by giving cash back if you don’t use it.

    Reply

  9. beowulf Says:

    Sorry for the late hit, but your insurance proposal reminds me of the healthcare section of Elliot Richardson’s “Mega Proposal” when he was Nixon’ HEW Secretary. The government would replace Medicare and private insurance with a federal income-adjusted catastrophic insurance plan (with subsidies for the poor and the ability for everyone else to buy private Medigap coverage).

    Unfortunately, Richardson went to the Pentagon in 1973 and Cap Weinberger took over at HEW and dropped Richardson’s plan. So in 1974, Nixon pushed an employer mandate to buy private insurance (very similar to Obamacare in fact) and Ted Kennedy pushed Medicare for All. Actually, Kennedy and Ways and Means Chairman Wilbur Mills were willing to compromise with go to Medicare buy in “public option” (to use current parlance) but Nixon and Mills were both bounced from power for their respective scandals before a deal could be cut. Its a pity they didn’t just agree to endorse the Administration’s own catastrophic insurance plan.

    The Mega Proposal section on health insurance starts on page 23 of the linked pdf.
    http://www.eric.ed.gov/ERICWebPortal/recordDetail?accno=ED080148

    Reply

  10. nystockguru Says:

    If this administration wants to give the US Dollar strength they could back the Medicare buy-in plan along with Congress.

    Washington Post December 11th, 2009
    ” Pelosi backs Medicare buy-in plan in Senate health-care deal…
    Speaker says expansion has appeal, but she still prefers a public option ”

    By endorsing the medicare buy-in it keeps free market health care plans costs in check. It meets most of the administration’s criteria for a fraction of the cost. It also keeps the unemployment rate in the health care sector unchanged.

    The administration’s criteria for reform are listed below:


    * Reduce long-term growth of health care costs for businesses and government
    * Protect families from bankruptcy or debt because of health care costs
    * Guarantee choice of doctors and health plans
    * Invest in prevention and wellness
    * Improve patient safety and quality of care
    * Assure affordable, quality health coverage for all Americans
    * Maintain coverage when you change or lose your job
    * End barriers to coverage for people with pre-existing medical conditions ‘

    Whitehouse.gov/issues/healthcare

    Reply

  11. Uno Says:

    Here is the way I see it:

    Fact/Assumption: We currently have a health care monopoly or ogilopoly or whatever: big health insurance plus big pharma.

    Problem: People think today’s systems is somehow “free markets” for “governemnt” health care is someone “socialist”.

    I know of no other way to break a massive monopoly without government regulation and takeover?

    The Ron Paul / Libertarian true free market health care would be great but 100% impossible in implement without an initial government takeoover to break the monopoly.

    Will someone that considers themselves right-wing / republican please explain in detailed steps how you go from today to “free market health care”

    For example, I would like to start my own hospital, train and hire my own doctors to complete with the American Medical Association. I would like to bring innovation in medicine and re-define the meaning of “doctor” how do I do that? how do you get there from today withouth massive goverment takeover?

    Any policy that breaks this monopoly will be a huge benefit for Americans. Universal health care, Mosler plan, Obama’s original plan prior to being watered down by insurance lobbiest.

    I hold out some hope that Obama’s plan as it is not will allow for inroads into the health care monopoly.

    Many states are taking on the insurance monopolies in thier own way, which is also hopefull. California has it’s own universal health care plan in the works.

    Universial Health Care = A Jobs Boom.

    50% of people I know are working in some corproate job simply because it gives them and thier families access to health care. Otherwise, they would working in much more productive small business environments or building thier own businesses.

    Reply

    Mark Reply:

    Amen to that! I have been saying the exact same thing for years. How can a simpleton like me be so smart? Is Congress that dumb,,,,or greedy?

    Reply

  12. EconRob Says:

    A couple of comments.

    I love the idea of HSAs. We have one and it makes us much better consumers.

    I love the idea of co-pays. It makes up pay attention to the costs.

    I love the idea of looser pay and damage limits on malpractice claims. The amount of money that goes to defensive medicine tests is unacceptable. I see all sorts of numbers, but it is material. Besides the actual costs it causes friction. Doctors can be afraid to treat unless all bases are covered.

    This is a knotty problem and I would like to see Federalism try to find solutions. I would allow a lot of leeway for States to experiment.

    I think there should at least three ideas tried more fully. 1) catastrophic plans, 2) HSAs (as you point out), and 3) relatively un-regulated group buying co-ops.

    Reply

    John O'Connell Reply:

    @EconRob,

    Me, too.

    Reply

  13. Greg Colvin Says:

    I don’t like so-called Advantage 3, as I fear Disadvantage 1 will be worse. I don’t know of any evidence that a significant number of people choose to visit their doctors rather than enjoy their leisure. As one doctor said to me, “Most people don’t come in until they can’t stop the bleeding.”

    Reply

    WARREN MOSLER Reply:

    understood

    Reply

  14. John O'Connell Says:

    “As a matter of economics and public purpose it is counter productive for health care to be a marginal cost of production.”

    Then simply take the employer out of the picture. Eliminate the employer’s tax deduction for health insurance, let wages rise to compensate for the loss of the benefit, and let the employee pay for his own insurance and deduct it from his taxable income.

    Everyone comes out even, and the “counter-productive” is gone.

    Lots more choice for the employee, too, and eliminates the subsidy to the “2nd” employer in the family, who doesn’t have insurance costs, but pays lower wages anyway just because it is available.

    Reply

    WARREN MOSLER Reply:

    i like my proposal a lot better

    Reply

  15. Warren Mosler’s proposals for the 99% | Mecpoc Says:

    [...] to private sector employment. 4. See my universal health care proposals on this website (http://www.moslereconomics.com/2009/03/02/mosler-health-care-proposal/). 5. See my proposals for narrow banking, the Fed, the Treasury and the FDIC on this website [...]

  16. Fredisinmyhead Says:

    I have an idea but am not sure if it is good or bad, so here goes.

    Why not entice the foreign government holders of treasuries to put their dollars in a (medical)superfund that earns a higher rate of interest and pays for universal health care, as opposed to just paying them interest for no real useful purpose? If the dollars to pay their interest can be created at will so to speak, why not create the interest payments to pay them for funding our citizen’s health care(Medicare for all)?
    Or would that be pushing it too far in the way that we take advantage of China, which is really put upon the their poor and oppressed citizens there?

    Reply

    WARREN MOSLER Reply:

    you read ‘the 7dif’ yet?
    or ’0 is the natural rate of interest’ also on this website?

    Reply

  17. Fredisinmyhead Says:

    Thanks for the quick reply. No, I haven’t yet because I cannot open pdf files because of broken files. But, I get your answer that it cannot be done with something that technically/actually doesn’t exist in reality, just the data entry world. I kind of figured that but without that knowledge, that was the basis for my question.
    I have been so excited about the “enlightening moment” where economics and the monetary system has finally made some sense that I have got the cart ahead of the horse. It’s similar to the day that algebra went from symbols and numbers to making sense, but I am still in the very early “grasshopper” stage.

    Again, thank you.

    Reply

    WARREN MOSLER Reply:

    Read the 7dif yet? looking fwd to your response!

    Reply

  18. Fredisinmyhead Says:

    I would like the priveledge to re-phrase the question. If the citizens of this country are niave or gullible enough to beleive that SS and Medicare are going broke and that we “borrow” money from China for our government to continue existing, maybe they would also beleive that “Medicare for all” could actually be funded this way and politicians could sell the idea because of the way it is funded/constructed.

    A little too much or unethical?

    * Disclaimer: I reserve the right to willingly concede my inabaility to make a reasoned argument AT THIS POINT IN TIME, due solely because of my inferior knowledge of the subject at issue, and of the accompanying background of such.

    Reply

  19. Dan Lynch Says:

    Just wanted to say that I have re-visited the Mosler Health Care proposal several times, and each time I like it more than the time before.

    – it uses carrots rather than sticks

    – any redistribution effect would be downward, as it should be

    – it combines the best of the free market for routine doctor visits with government support for catastrophic medical expenses

    – it’s simple and easy to understand (unlike O-care)

    If anything is missing from the plan, it is how to address the supply of doctors and other health care professionals. I’m not sure that we should leave it up to the invisible hand of the market considering the 8 years of education required, the high cost of education in the US, and restrictions on entry into medical colleges ?

    Personally, I’d support a free ride through med/nursing school for any qualified applicant, and possibly even pay students a stipend and/or offer a student JG so they can have a decent life while they are attending school.

    Reply

    WARREN MOSLER Reply:

    glad someone likes it!
    ;)

    Reply

    Tom Hickey Reply:

    @Dan Lynch,

    Dan If anything is missing from the plan, it is how to address the supply of doctors and other health care professionals. I’m not sure that we should leave it up to the invisible hand of the market considering the 8 years of education required, the high cost of education in the US, and restrictions on entry into medical colleges ? Personally, I’d support a free ride through med/nursing school for any qualified applicant, and possibly even pay students a stipend and/or offer a student JG so they can have a decent life while they are attending school.

    Agree that would be a useful add to an already good plan, although I prefer Medicare for all and more comprehensive Medicare than we have now. A lot of the rising costs are supply-side issues resulting from a sector that is inherently monopolist or oligarchic and not suitable for cost-containment through market competition. In addition, scarcity of physicians now depriving many rural areas of care partially or entirely. Moreover, more emphasis on health education, prevention and early treatment could greatly reduced unnecessary expense. In addition, the air, water, and food supply also figure in here importantly and reducing negative externality would also reduce costs that are socialized to a large degree in disutility involving the health and well-being of the population.

    Reply

    WARREN MOSLER Reply:

    my proposal probably doubles the time doctors have for patients, a massive supply shock

    Reply

    Tom Hickey Reply:

    @WARREN MOSLER,

    Agreed

    But a considerable part of the problem now is serving rural areas due to lack of qualified personnel. The qualifying of nurse practitioners was a positive step in this regard and many rural clinics are staff with them, and they make the call whether traveling to physician is necessary. Otherwise, for some people it is over an hour or hour by car, or going by helicopter in an emergency. Many rural areas have helicopter insurance available now.

    The US needs more people on the ground to keep up with population growth, the trend toward specialization that reduces the # of gp’s, and the trend toward more universal care that is putting more people into the system. These are issues particularly west of the Mississippi, where the population is pretty spread out and distances are great.

  20. Unforgiven Says:

    Under disadvantages, you mention $1500 not subject to the rebate. Thought it was $1000?

    Reply

  21. Rodger Malcolm Mitchell Says:

    While I agree with the overall thrust of Warren’s proposal, I have trouble with the details:

    “Everyone gets a ‘medical debit card’ with perhaps $5000 in it to be used for qualifying medical expenses (including dental) for the year.
    –Expenses beyond that are covered by catastrophic insurance.
    –At the end of the year, the debit card holder gets a check for the unused balance on the card, up to $4,000, with the $1,000 to be spent on preventative measures not refundable.”

    So, a poor person must decide whether to spend on health care or receive $4,000. This is counter-productive.

    “Doctor/patient time doubled as doctor/insurance company time is eliminated.”

    Wrongly assumes the doctor is the one who deals with insurance companies. Mostly, secretaries deal with insurance companies. The typical doctor will not have additional time for patient care.

    Rather than a complicated, convoluted program, requiring even more record keeping by individuals, I suggest the federal government merely provide Medicare (Parts A, B &D) to every man, woman and child in America.

    Reply

    Tom Hickey Reply:

    @Rodger Malcolm Mitchell,

    RMM: “Rather than a complicated, convoluted program, requiring even more record keeping by individuals, ”

    Right. and I would add research and decision-making, often beyond an individual or family’s capacity. It’s necessary to figure in the transaction cost, and the aggregate cost likely increases when it is impacting millions of people all the time. Medicare for all is the efficient way to go, and it eliminates those hidden transaction costs transferred to individuals as a negative externality, which acts as a “tax” by socializing expense.

    Reply

    WARREN MOSLER Reply:

    my proposal is medicare for all once the individual has spent his 4,000.

    Reply

    WARREN MOSLER Reply:

    Americans are concerned about people abusing the system, which my proposal addresses.

    And my ‘catastrophic’ is full Medicare with no donut holes, no co pays, etc.

    And it means less complication than yours as for the first $4000 spent doctors just get paid without dealing with Medicare, which will be about 80% of the time I’m told.

    Reply

    Rodger Malcolm Mitchell Reply:

    @WARREN MOSLER, “And it means less complication than yours as for the first $4000 spent doctors just get paid without dealing with Medicare, which will be about 80% of the time I’m told.”

    I doubt that chasing dozens of individual patients for payment will be less complicated for doctors, than being paid by Medicare. And, it certainly will not be less complicated for patients, who would have to evaluate and pay the doctor’s bills.

    As a Medicare patient, I don’t have to go through all that stuff. The doctor submits the bill; Medicare pays some or all; I do nothing.

    Finally, most doctors don’t personally handle office billing. They have a secretary who submits bills to Medicare.

    As for “abusing the system,” are we talking about patients or doctors? Billing patients directly certainly allows for more doctor abuse, because patients don’t know how to evaluate doctor bills.

    As for patient abuse, are you suggesting a large percentage of people visit doctors just for pleasure?

    We should follow the KISS (Keep It Simple, Stupid) principle: Expand the already-existing, well-tested, well-accepted Medicare — for all.

    Reply

    WARREN MOSLER Reply:

    no chasing.
    for the first 4,000, patients pay the doctors directly on sight.
    and doctors have to post prices on the outside of their doors, like gas stations.

    and yes, frees up office staff for alternative employment. aka, productivity increase

    mine is about as simple as it gets, from what i’ve seen.

  22. Rodger Malcolm Mitchell Says:

    no chasing.
    for the first 4,000, patients pay the doctors directly on sight.

    On sight? How does the patient or the doctor know in advance, what the doctor is going to do? Or does it come at the end: “You cannot leave this office until you pay me.” :)

    Warren, Medicare exists. It is simple. It works. People like it. Are you also suggesting that your system replace Medicare for those who already have it? Or is this a system in addition to a system?

    Reply

    WARREN MOSLER Reply:

    Yes, I pay my dentist and eye doctor when I leave, and sometimes my doctor as well, when no insurance companies are involved.

    Yes, I like Medicare, and my proposal includes it for everyone, once their $4000 is exhausted.

    And for those on Medicare now, they don’t start using it until their $4,000 is exhausted, saving
    heaps of doctor time, admin. time, etc.

    Reply

    Rodger Malcolm Mitchell Reply:

    @WARREN MOSLER,

    So we disagree on $4,000, and that is supposed to be an improvement over straight Medicare?

    The “save doctor time, administrative time” thing is bogus, because collecting from patients will be no easier than collecting from the government, and there will be no one to monitor prices. And please don’t think patients can do it.

    For me, I’d rather have Medicare than to be bothered checking prices, paying bills, negotiating with doctors, figuring when my $4,000 is up, and all the other hassle.

    I suspect doctors too, would rather not fall into the “airline system,” where lowest price wins, no one makes money and everyone gets lousy service.

    Anyway, “Medicare for all” is easy to visualize, so maybe you should call your plan “Moslercare, to give it an identity.

    My main hope is to get everyone in America covered, and if “Moslercare” will do it, so be it.

    Reply

  23. Cezary Wojcik Says:

    What’s the purpose of the Health Care system described in “Mosler Health Care Proposal” ?

    Reply

  24. Cezary Wojcik Says:

    Dear Warren,

    All “Health Care” systems i know of are actually “Disease Care” Systems. The one you presented seems no exception. If Medical staff is paid for curring (freeing from disease) people then decent supply of unhealthy people are required to perpetuate the system at the level which compromises supply of doctors and demand for curration services.

    True HCS treats people illnesses as a cost and long-term health as a benefit. So medical sector should be paid for customers who stay healthy and treat curring unhealthy people processes as a cost.

    Reply

    WARREN MOSLER Reply:

    my proposal has some of that
    the 1000 for preventative that’s use it or lose it
    and the incentive to stay healthy and get your $4000 christmas present each year

    Reply

    Cezary Wojcik Reply:

    @WARREN MOSLER,

    To legitimately assess your proposal a model should be constructed and researched for different scenarios. Anyhow medical sector is still paid for caring about the diseases not health of people.

    In true HCS you, and your doctor, would be the most benificiary of the system in terms of money as you look like in your early 40ties, slim, healthy and happy. :-)

    Merry Christmas
    Cezary

    Reply

    WARREN MOSLER Reply:

    agreed! So the Polish guy goes to the eye doctor, who asks him if he can read the bottom line. The guy says ‘read it? I know the guy!’
    ;)

    Cezary Wojcik Reply:

    ,

    The guy you think can’t read the bottom line: “and the incentive to stay healthy and get your $4000 christmas present each year” is fat, do not exercise at all, reluctant to go to doctors except within the yearly $1000 budget, is going to cash-in the same $4000 gift for Christmas. :-) He will abstain from doctors until his precocious death.

    If the HC system is designed to award those who don’t need any incentive to stay healthy and assist in shortening lives of those who are not disciplined to care for their health properly, this kind of incentive definitely makes the point.

  25. Cezary Wojcik Says:

    The purpose without a method how to achieve it or method without a purpose produces sub-optimal solutions.

    Reply

  26. Steve Wierhake Says:

    Very interesting proposal. I’ll share it with my friend who is heavily involved with PNHP (Physicians for a National Health Progam). PNHP is advocating single-payer, “medicare for all”.

    For Mosler’s proposal, I would want regulation requiring insurance companies to offer the catastrophic plans to all applicants, with no pre-existing condition limitations, or at least no permanent limitations.

    Reply

    WARREN MOSLER Reply:

    that would be covered by ‘Medicare for all/no copays/no donuts/no charges’ once the annual allotment of $4000 has been exhausted, thanks!

    Reply

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