Health Bucks — A Health Care Alternative

This is a suggestion of how health care can be administrated by government, insurance companies and private individuals. It will make health care more efficient. It will preserve or give back freedom to individuals.
The wording of this essay is crafted so that it can apply to different countries and different currencies.

Summary

This is a suggestion of a new health care plan, that would solve the health care crisis in a healthy way. Advantages of the new system:

  1. Reduces health care costs
  2. Flexible
  3. Non-exclusive
  4. Fraud detectable
  5. Efficient
  6. Freedom of use
  7. Enhances health care quality

Introduction

This suggestion of a new health care plan is very simple. Most of this document is devoted to discussing its implementation, its use, its advantages and its disadvantages. Obviously, people other than myself will have to help to complete this document.

The heart of this plan involves the creation of a new currency, which we’ll call, for lack of a better term, the “health buck”. This is not a new idea, for, in the U.S., food stamps are an alternative currency. Health bucks have much in common with food stamps:

  • They are issued by the government.
  • They are financed with tax money.
  • They are limited in that they may be spent only in the category of health care.

Implementation

The money now collected in health care related taxes will be divided by the number of people in the country legally and that amount, in health bucks, will be credited to each person. I say “legally” because illegal aliens wish to live “off the record”, so the government will not know that they, as individuals, exist. But, there is a way for them to get health bucks, too, by buying them from legal residents. Those recognized by the government as “special needs” people may receive an allocation of health bucks more than those who do not have these special needs.

The distribution of health bucks by the government will be done with the same frequency that other direct subsidies are done, usually monthly. When a child is born, the registration of that fact with the government will trigger the distribution of health bucks to the child’s account. Similarly, the registration of a person’s death will stop that distribution. Health bucks left in a dead person’s account could be distributed to the person’s heirs or the account could be canceled, effectively returning the remaining health bucks to the government.

A primary feature of this program is its pledge: No new taxes!

Use

Beside the government subsidy, a person may buy health bucks from the government or from another person with the country’s normal currency (dollars, euros, pounds, etc.)

A company providing a health benefit will have the option of giving its employees health bucks instead of insurance. Any tax advantages that the government gives to a company for providing health benefits could also apply to the provision of health bucks.

Existing government and private health care insurance providers will still exist. A recipient of health bucks will have the option of having the government give their allocation of health bucks to their choice of health care insurance providers.

Health bucks will be issued, traded and spent exclusively on a PayPal like web site. This is necessary to minimize fraud. (A health buck card could be used to transfer health buck funds from an individual’s account to a health care provider’s account.)

Health bucks, like normal currency, would be able to purchase health care, but only health care. This would include all health practitioners, such as doctors, nurses, chiropractors, alternative health practitioners, hospitals, nursing homes, health maintenance organizations (HMOs), the suppliers of drugs (both prescription and non-prescription), health food supplements, vitamins and so forth. Health bucks could also be spent for the housing needs of “special needs” people, such as senior citizens and the physically or mentally disabled. The things that health bucks can be spent on would be defined by the government, who would license those who could exchange them for the country’s normal currency.

It will be legal for a person who needs more health care than the number of health bucks he is issued to buy health care with normal currency. The person who needs them may buy health bucks from those who don’t. The market will determine how health bucks will be traded. Because a person can buy health care with normal currency, a health buck will never be worth more than that currency. But a person who doesn’t need them may be able to sell his health bucks at a discount.

Advantages

Reduces health care costs

The Health Buck Plan does not eliminate any other health plan by fiat. It provides health care money with much lower administrative costs than is usual with insurance services. The administration of The Health Buck Plan will be largely automated, both in the issuance and in the spending of health bucks. Human intervention will be required in only these circumstances:

  • When an individual applies to receive more health bucks than is automatically calculated, either on a one-time basis or on a regular basis.
  • For the certification of health care providers who want the government to exchange the health bucks they receive for normal currency at full value.
  • For fraud investigations. This will be made much easier because of the built in audit trail provided by the automated system.

The use of this plan forces insurance providers to compete for the individual’s health care money, thus reducing costs. The insurance providers will have to compete, not only with other insurance providers, but with the health care providers themselves. Costs may reduce the volume of business of some health insurance services so that they go out of business, but health care consumers will save money.

Flexible

Because health bucks are a currency, they may be given as (tax free) gifts to another person or to a charity. Because health bucks are issued by the government, the plan could be set up to permit the government to issue extra health bucks in the case of a catastrophe. These extra health bucks could be a gift or a loan. A health buck loan could be repaid with health bucks, either the patient’s own or those of his friends.

Health care could be paid for with a combination of health bucks, cash and even the proceeds from an insurance settlement.

Non-exclusive

This program doesn’t put the current forms of health care financing out of business. But, because health bucks are provided to each individual, that person will be able to shop for the best deal, whether from the health care provider directly or from the different forms of insurance.

Fraud detectable

One primary feature of this plan is that the expenditure of health bucks may be tracked through the government controlled web site, which will provide a fraud investigator with a single source for auditing.

If a health practitioner “cashes in” more health bucks than his business can be legitimately expected to do (or than the business reports as income), an audit of the practice will reveal that fact and appropriate penalties assessed. A simple penalty for one who misuses his privilege of converting health bucks to normal currency would be to deny him this privilege. He could still sell his services for cash.

Suppose that an individual sells his health bucks to another individual, but doesn’t reserve enough of them for his own needs and doesn’t have enough normal money to buy needed health care. He could go to the government for an additional allocation of health bucks. It would be easy for the government to see whether or not he had been issued health bucks that were not spent on health care. If so, he could be held to account for that fact.

Is this plan fraud proof? Not by a long shot. But neither are the current programs such as Medicare, Medicaid and Food Stamps (in the United States) and even private insurance. It will be easier to detect fraud with this plan.

Efficient

The administration of this plan is very simple. The government calculates the amount every person should have, then credits a PayPal-like account that the owner would use to transfer health funds. Because many people are not computer savvy, an electronic health card (like a credit card) could be used to effect the sale and expenditure of health bucks.

People will be able to buy their health care on the free market with a minimum of overhead expenses, which means that health care costs will come down.

Why, one might ask, would this plan not print paper health bucks? Primarily the reason is to facilitate auditing, and by extension, fraud prevention. Counterfeiting would not be a problem. It costs money to process paper. This system, being all electronic, will be cheaper to administrate.

Freedom of use

  • This plan makes use of the free market to reduce health care costs.
  • Private money may buy health bucks.
  • People may buy health care with normal currency as well as with health bucks.
  • Health bucks may be used by existing health care providing insurers, public and private.
  • The expenditure of health bucks are controlled by the beneficiary, who has a motivation to get the most “bang” for his buck.

Often, when an insurance company or government agency purchases services in bulk, the health care provider may compensate for the lower negotiated price by reducing the quality of the service. The Health Buck Plan introduces more competition into the health care industry. An individual needing a service will be able to do a cost / benefit evaluation of using the insurance service versus using his health bucks directly.

Health care providers and patients will decide what course of medical treatment is appropriate in a given case, not a bean counter at an insurance company.

Insurance companies usually pay for some medical services and deny payments for others. Alternative or experimental health care options are usually denied. By giving the individual the freedom to spend his health bucks as he chooses, treatments will become mainstream or will fall into disuse based on the effectiveness of the treatment.

Disadvantages

Because this system is efficient, existing high overhead health care providers will be threatened, for their ability to offer the user health care for a lower cost than people can negotiate for themselves will have to compete with those who will shop for the best deal for themselves. Insurance companies, whether government or private, will have to shop for contract prices from providers that will allow them to pay their overhead costs and still offer their policy holders an advantage over what the policy holder could do as an individual. Eventually, their only customers will be those who do not wish to shop for their own health care or who are unable for any reason to do so. This, however, will be an advantage for the health care consumer. The Health Buck Plan will, by its free nature, compete with these other forms of health care, requiring them to be more efficient or to go out of business.

The next disadvantage will be for the health care provider who has grown rich by learning how to manipulate (and defraud) the complex health care providing systems that currently exist. They will have to deal with individuals who are empowered with health bucks. This, too, is an advantage for the health care consumer.

The third disadvantage will be for the office worker who makes his money by the high overhead of the current government and private health insurance programs. People will be able to use their health bucks to buy health care instead of health care administration. This could threaten some of the health care administrative worker’s jobs.

The last disadvantage is for the politician who believes that the government should control how people should spend their money. This plan will give the people more health care choices and provide alternatives to government control.

In summary, this plan’s features are only disadvantageous to some people, but are advantageous to the consumers of health care and the tax payer.

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