By: Trey Whitt, CPA

Over the last several months, I've done a substantial amount of reading to try and understand the proposed health care reform legislation. I’ve also learned much more about our current system and proposals to make health care more affordable, efficient and accessible. 

I’ll try and stay away from political commentary and avoid quoting passages from the 1,100 pages or so of proposed legislation. There are a lot of information and statistics floating around. As Mark Twain said, “There are two kinds of lies, damn lies and statistics”. Based on my reading here are three of the most interesting common sense concepts I’ve encountered:

The first concept is personal responsibility. If you purchase a new car and neglect to perform any maintenance, 50,000 miles later when the engine goes, the dealer is going to refuse to honor the warranty. Not so with health care.

Most all of us pay the same health insurance premium regardless of how well (or poorly) we take care of ourselves. Many states have “community ratings” systems whereby providers are forced to charge the same premiums to any insured. There is no penalty for an unhealthy lifestyle – smokers or those with poor eating habits pay the same premium as those who exercise and watch their weight. That doesn’t seem like much of a formula for controlling or reducing costs.

The Obama plan continues the lack of personal responsibility for a healthy lifestyle. Just like life or car insurance, a true free market plan would allow insurers to evaluate a patient and charge based on their projected costs.

Because we have to protect and insure those with chronic illnesses and pre-existing conditions, the free market could create higher risk pools. Currently, about 30 states have high risk pools that automatically enroll people with pre-existing conditions. The premiums are capped and subsidized by individual states. Many experts believe creating a true free market system would eventually offer more (and cheaper) alternatives for those higher risk individuals.

The second point is, when it all began, healthcare was for catastrophic illness - heart attacks, strokes, cancer, etc. Like any other insurance, the more potential ailments you add, the higher the premium. While most of us want coverage for serious illnesses, we may be willing to self insure for others. The point is you wouldn't insure your car against damage from bird droppings or your house against a broken window.

A number of states (approximately 20) require "standard benefits packages" requiring insurers to include coverage for heating aids, obesity treatments, alcohol and drug treatment, and a number of others. Coverage for benefits like hairpieces (11 states) and acupuncture (10 states) sounds more like lobbying rather than healthcare. Reducing the benefit package to the essentials would decrease the cost - some estimate by as much as 15 percent. This allows more people to afford coverage and lowers the number of uninsured. Those who want the extra benefits and coverage can elect to do so.

Finally, we need incentives to turn healthcare users into consumers. When I go to the doctor, I pay a $20 Blue Cross copay. Fortunately, I don't have a lot of issues but I never question the tests they run or how much they cost. Don't get me wrong, my primary care physician is a great guy and I trust him implicitly. But, a lot of these physicians obviously have to worry about litigation and you wonder how many tests (and healthcare dollars) are consumed unnecessarily. Limiting malpractice liability is a whole different discussion.

Back to the car analogy - most of us look at our tires, disc pads, or ask about alternatives and/or cost before we authorize work. This is the thought when high deductible health insurance became available. Instead of paying $10-$11,000 a year for coverage, you pay maybe $5,000 for a high deductible policy and the remainder goes into an account. When you go see the doctor for a runny nose you pay out of your account - the insurance pays if you have a heart attack. The point is that you are in charge of the dollars; the money comes out of your pocket (so to speak) so maybe you and everyone else will spend the money more judiciously.

I think we have a responsibility to provide some level of care for our citizens. Note: citizens do not include illegal aliens - not sure who is lying. However, relying on the folks who brought you Medicare, Social Security, and a $787 Billion dollar rescue plan seems like a recipe for disaster.