I've become a concerned citizen

I decided to write my state senator about my fix for healthcare in michigan. Below is original email:

Senator Switalski,

As a concerned citizen of Michigan I am writing you with an idea to bring this state out of the terrible economic downturn we are in. In 2005 Rick Wagoner CEO of GM made the comment

“CEO Rick Wagoner told shareholders that health benefits add a staggering $1,500 to the price of every vehicle GM makes. GM will spend more than $5.6 billion this year on health coverage for 1.1 million people” – Boston Globe June 16, 2005

Can you imagine if those costs were cut in half or even thirds? How much more competitive would GM and the other big 3 be if they weren’t being weighed down with staggering health costs. Not to mention the suppliers like Delphi which have similar problems. Jeff Jacoby the Boston Globe columnist who reported the above also said the following:

“The health benefits GM provides are generous to the point of recklessness. While its salaried employees pay 27 percent of their healthcare costs, the nearly 120,000 workers who belong to the United Auto Workers pay a minuscule 7 percent. They have no deductibles, no monthly premiums -- only modest co-pays for doctor's visits and prescriptions. Benefits that lavish might have been tolerable back when GM was king of the automotive hill and could count on selling enough cars to defray such a huge expense. But GM today sells only about one-fourth of the cars bought in America -- down from nearly half in the 1950s.”

I’ll first state my health care plan to drastically change the health care coverage for all Michiganders.

1. High Deductible insurance is given to all residents of the state. The state pays health care providers once the residents of the state meet the deductible amounts (see provisos below) at Medicare rates and cover the exact same items that Medicare covers.

Here are the provisos to #1
A. Every person from 1-18 is completely covered no deductible
B. Single people from 19-65 have $6,000 deductible
C. Married people from 19-65 have $6k deductible per person or $8k per couple
D. People over 65 have a $2k a year from state to cover Medicare costs and deductibles
E. 100% of Preventative measures are covered
F. Employers must contribute 40% of Deductible for Full Time workers and 20% of part time workers that work 20 hours a week. If someone does not work 20 hours a week the employer is not required to pay anything. Conversely, an employer may only pay 80% of deductible each year.

G. Smoking cessation, Gym membership, or other weight loss programs all contribute up to $1500 of Deductible. Dental care can contribute up to $2,000 of deductible.

2. $2 a gallon Gasoline tax is affixed to pay for program. Michigan averages 4.5 billion gallons of gasoline consumed each year. That means 9 billion dollars to cover 7.1 million people. Reasons for a gas tax:

A. It’s easy to collect - http://freakonomics.blogs.nytimes.com/2008/11/24/the-gas-tax-revisited-a-guest-post/

B. It gives incentive to the designers, engineers and makers of automobiles to come up with gas saving cars.

3. 10% Fast Food sales tax. Average American consumes 159 fast food meals a yearhttp://answers.google.com/answers/threadview/id/779290.html. A 10% tax on an average meal of $6 for 7.1 million equals almost 700 million. These revenues would be used solely for Preventative measures and covering Children’s health. Reasons for this tax

A. Obesity and Fast Food consumption are correlated http://www.theyesword.com/obesity_and_fast_food.htm
B. Easily to collect.

4. Statewide system of Health care coverage that every provider in State must subscribe to track how much of deductible is used.

In conclusion, this plan makes sense on many levels.

A. It appeals to democrats as a way to broaden coverage to all Michigan residents

B. It appeals to Republicans as a Health Savings account provides market based solution

C. It appeals to hospitals and health care providers because as soon as a person meets their deductible amount ONE payer pays the reimbursement.

D. It appeals to business out of state to move to Michigan. Business’ where payroll makes up a substantial amount of costs are seeing the dramatic rise in health care costs.

Example #1 of how system would work: Bill Smith is single under 65 and has a health savings account to which his employer contributes $4800 of his deductible each year. Bill contributes the other 1,200. Bill has a heart problem and angioplasty which costs $20,000 by the hospital. Bill pays his $6,000 and the state insurance covers the other 14,000 through payments or discounts.

Example #2 of how system would work: Bill Smith is single, under 65 and has part time work under $20 hours a week. His employer contributes $0 of his deductible each year. Bill contributes no money as well. Bill has a heart problem and angioplasty which costs $20,000 by the hospital. Bill has a responsibility of $6,000 and the state insurance covers the other 14,000 through payments or discounts. If bill defaults on his portion the hospital at least receives their compensation from the state.

The above is my plan. You may call me or email me with any questions.

I received the following correspondence from the senator:

Thanks for you email. You have an interesting plan. I agree with the idea of universal catastrophic coverage. I agree with taking this burden from the auto companies and businesses.

A few questions. If you want to give everyone the same as Medicare, plus a $6000 deductible, why do people over 65, who already have Medicare, get $2000? In example #1, how does a 60/40 split yield $4800 and $1200. You've switched to the 80%. How will people react who now have full coverage?

All in all, you raise points well worth considering.
Mickey

I then responded to his questions with the following:

My responses are in bold

Thanks for you email. You have an interesting plan. I agree with the idea of universal catastrophic coverage. I agree with taking this burden from the auto companies and businesses.

A few questions:

If you want to give everyone the same as Medicare, plus a $6000 deductible, why do people over 65, who already have Medicare, get $2000?

I was unclear on my first email. Instead of saying “Every resident from Michigan” it should have stated “Every resident from Michigan 65 and younger”. Those who qualify for Medicare should use Medicare. There are no premiums for Medicare Part A but the deductible is $1,075 (2008 number) and the Premiums for part B are $97 a month.

In example #1, how does a 60/40 split yield $4800 and $1200. You've switched to the 80%.

My example #1 was assuming that the persons place of work paid 80% of the deductible as noted in Proviso F. Proviso F states:

Employers must contribute 40% of Deductible for Full Time workers and 20% of part time workers that work 20 hours a week. If someone does not work 20 hours a week the employer is not required to pay anything. Conversely, an employer may only pay 80% of deductible each year.

How will people react who now have full coverage?

Moral Hazard which you are describing right now (IE if people have insurance they use it) is mitigated by the large deductible. If its still a worry the state could put in another proviso that recognized voluntary or experimental medical work cannot count towards your deductible and is not covered by the states High deductible insurance. Or they could add a proviso that has people pay coinsurance up to say 10k with a stop loss or some total out of pocket amount. Additionally, the insurance could be regulated to only be available in Michigan to Michigan Providers. People traveling from the state could be given an option to purchase travel insurance at low amounts.

Another thing I neglected to mention was Medicaid. In 2006 MI spent 8.3 billion in Medicaid. Half of that funding came from the Federal government. My 9 billion estimate should have been 13 billion.

Thanks for hearing out my thoughts.


He then sent me another email stating that he used my ideas in his plan. Here is the macomb daily article he is talking about. Not much of my plan in there.

Oh well at least I tried.