An Honest Approach to Healthcare Financing

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Due to the high cost of medical care, it is difficult for many people to afford treatment. Millions are either uninsured or underinsured. Workers and unions demand benefits to the extent that many people have an entitlement mindset when it comes to the question of who should pay for healthcare.

In reality, most people pay for their own medical care. If the employer provides health insurance, then one receives less monetary compensation in order to offset the employer’s costs. Some people purchase insurance on their own. Seniors are covered by Medicare, a system where the individual pays a portion of the cost in the form of premiums and the remainder is paid by the government out of tax revenues. Still, there are a significant number of people with no insurance. Some choose this option deliberately, either because of significant wealth that makes medical care affordable, or by taking a chance on not having a need for significant cash expenditures for healthcare. Others find it so expensive to purchase health insurance that they simply give up trying to obtain it.

Few people understand the basic rationale for insurance of any kind. It actually is a means to provide funds for large, unusual, and unexpected losses. For example, one who owns a house does not need insurance to cover a broken window or a leaky faucet. The greater need is to cover more significant damage such as occurs when a hailstorm destroys the roof or when fire levels most of the house. The owner may need to pay a large deductible in the case of a major damaging event, but insurance coverage protects him from possible financial ruin by paying the balance.

In short, we pay insurance premiums to a company, which creates a fund earmarked for prescribed losses. We do not, however, buy insurance to provide food, clothing, shelter, and other needs. Imagine how little concern we would have for cost if these items were paid for by insurance.

We are prone to utilize too much healthcare because we tend to have an entitlement mindset. We are deceived. We think that insurance or the government—not we ourselves—will pay for medical expenses. The cost of care is not a consideration for many of us, especially if co-pays and deductibles are small. Nor is the amount of care utilized a consideration.

A better solution for people to pay for their healthcare is the Health Savings Account (HSA) or Medical IRA. Take as an example a situation in which a person starts with an allocation of $5,000. If he pays this out of his own funds, it is tax deductible. In the course of a year, he draws on this fund to pay out medical expenses. If he uses less than $5,000, the remainder is put into a retirement account such as an IRA to be used in ways similar to other IRAs. The person also purchases a high deductible health insurance policy (tax deductible) to cover expenses after he has paid out at least $5,000 during the year for healthcare. Similarly, an employer could provide these funds and pay the premium for a person.

Medical care for the poor could be handled by a similar method. For those in lower income groups known as the working poor, the government could provide the initial funds as well as the premium for the insurance policy through tax credits. For the indigent, the government would fully fund private HSAs and high-deductible insurance policies. As in other HSAs, unused funds would go into IRAs. People would be required to sign up for these plans, possibly resulting in a side benefit, identifying undocumented aliens in the country. In addition, the HSA, and other forms of health insurance, should be portable. Leaving a job for any reason should not put one’s health insurance at risk.

The HSA concept is good because it motivates patients to consider the cost and amount of medical care purchased. Patients may engage more seriously in preventive medicine and see the importance of making lifestyle changes. They might think twice about going to a doctor simply for a cold, or demanding expensive antibiotics for an upper respiratory infection. During the past few years, arthritic pain has been managed in many patients with Celebrex, yet less expensive treatments such as Naprosyn and Ibuprofen are available. Furthermore, if people were responsible for paying more of their medical costs, many expensive visits to the emergency room for non-emergency care would be avoided. Patients would not as readily submit to excessive diagnostic testing if they paid for it out of their own pockets.

At the same time, the high cost of healthcare cannot be reined in without major tort reform in this country. We in the U.S. are unique in having a problem of excessive monetary awards for medical malpractice. The severity of the problem varies from state to state. In some areas, the annual premiums for malpractice insurance approach $200,000 for doctors in high-risk specialties. Further, the U.S. has most of the world’s lawyers. According to the Virginia Law Review, the U.S. has 3.11 lawyers per thousand people. Other developed nations range from 1.49 in Britain to 0.11 per thousand in Japan.

The litigiousness in our society adds to the cost of medical care, not just by the excessive size of jury awards in malpractice cases and the high cost of malpractice insurance, but also by stimulating excessive numbers of medical tests. Some time ago, it was estimated that for every dollar increase in malpractice premium rates for physicians, the cost of medical care increased by three dollars.

This is simply defensive medicine—doctors order more than the usual number of tests in order to show that they have been more than careful in providing diagnoses and treatments.

How can you and I be involved? We are wrestling with how to pay for something that is expensive. But cost is only one part of the equation. The other is how to decrease the demand for the product. As Christians, we can bring biblical wisdom to this aspect of the discussion in two areas.

First, Scripture has much to say about money. People in our society—some of whom are well educated—tend to be financially illiterate. Many are convinced that the government can and should make healthcare more affordable merely by instituting the right programs. They fail to realize that ultimately we all pay the bills ourselves. The Bible speaks against greed and promotes a work ethic that includes self-reliance (2 Thess. 3:10).

Carl Henry harshly condemned socialistic systems, saying, “The failures of the welfare state have given fresh importance to the Christian virtue of work, which even at the elemental biological level of physical subsistence emphasizes the necessary labor of one’s own hands.” Socialism and national healthcare are not the answers. They arguably have been failures in other countries. People from Scandinavia, Canada, and other places with socialized medicine offer anecdotal reports of both the inadequate quantity and quality of medical care in those countries.

Second, the church can help to reduce the demand for healthcare by promoting and practicing biblical lifestyles. Recent data give a clear example. It has been shown that the single parent family is the best predictor of poverty and associated diseases and conditions. These dysfunctional families show increased incidence of crime, delinquency, drug abuse, and other problems. The Bible condemns alcohol abuse, a condition that costs our society greatly in dollars, disease, and deaths. Gluttony, one of the Seven Deadly Sins, actually refers to excessive indulgence in more than just food. Two-thirds of Americans are overweight or obese, conditions associated with nearly thirty diseases. As a result, these people consume far more money for health problems than do others. Are any pastors preaching in our day about gluttony? Turning our society toward acceptance of biblical values will do far more good than will government handouts.

Healthcare is not free. An honest assessment of the factors contributing to the excessive costs involved will allow us to devise better systems of payment and insurance. Patients should be in positions to purchase medical care as intelligently as they obtain the other necessities of life. Health Savings Accounts represent a rational method of healthcare insurance for people at any income level. This will motivate people to take more ownership of their health needs and thereby decrease overall costs and increase overall health.