How about a Flat Rate Solution for Healthcare

First Draft - Friday, September 18, 2009

I am getting tired of the stalemate in Congress and the Senate over healthcare or health insurance reform. To me it so simple.

When I was buying a car last month, the salesman told me to budget 13% of my gross income, no more, no less.

We want to argue over what healthcare should cost. Why not just agree that we budget 13% of a working person’s gross income goes to making the car payment, which is a reasonable amount for budgeting for healthcare or health insurance. Thirteen percent for a car. Thirteen percent for healthcare.

Who should collect it?
Who do we have collecting taxes in this country?
Who will take it out of your pay check every month? That person should make the deductions and send it to the U.S. Treasury.

If you make $13 a hour, you should be paying $1.70 for healthcare ($304 per month). If you are making $7 a hour, you should be paying 91 cents for healthcare per hour ($168 per month) If you make $50 a hour, you should be paying $6.50 for healthcare per hour ($1,170 per month).

If that does not sound fare to you then, we play with tax credits.

Go back to the car payment analogy. Let’s decide that to provide for reasonable healthcare we need to max out the amount each month.
One person, making $33,000 a year, could make a car payment of $4290 a year or $357 a month. Same amount as a car payment. What that will pay for needs to be determined, but I am going to set that as the budget amount.

If you are single, that is what you pay for health insurance.

If you are a couple of people, both earning an income, the amount goes up by double - $715.

If you have a child or a dependent, or just a partner that is NOT working, it gets tricky. Healthcare services for ONE person are the same regardless of the age or size of the person. One person is one person, and they are going to use the minimum $357 of services for healthcare. Solution? Ask the taxman.

If you are a couple, married, not married, working or not working, does not matter. The government matches the working person’s income for ONE healthcare payment of $357 per month. If there is one person work, that is TWO units.

Where does that money for the EXTRA unit come from?
TAXES, that other thing that comes out of your paycheck each month. That guy making $33,000 a month still pays taxes to the tune of 23% a month, or $7590 a year or $632.50 a month. The existing tax pocket pays for the missing amount each month, if needed, if not needed, you get a tax credit at the end of the year.

You are a couple with only one person working in the household. No problem. Your existing taxes pay for that person. Your aging parent is living with you: their social security pays $357 for their medical needs.
You have one or two children, with just one income earner. No problem, we hit the tax pocket for the extra health units. More than two? Ask the taxman.

Someone needs to go to work, maybe. Don’t expect a tax refund.

That guy is making $33,000 and paying in for healthcare and taxes ($4290 plus $7790) or $12,080 a year or $1,006 per month for medical coverage of himself/herself and his/her partner and their two dependents. Might not be paying for the national defense or the interstate highway system, but at least that person is paying for healthcare for the whole family.

What does that buy?
That needs to be determined yet, but that car payment of $357 is the SAME amount he pays for every person in the family to a maximum of $1,006 per month.

Who collects this money?
The same person that collects your taxes will collect your healthcare payment (lets not call it a tax…).

Who pays for the healthcare insurance package?
The same person that pays your grandmother each month: Social Security.
Social Security will now collect for your so called retirement benefit and for your healthcare benefit.

Who pays the insurance company?
Social Security pays them for the standard U.S. Healthcare Policy the amount of $357 a month per person per month.

What does the working citizen or working non-citizen get for that amount per month?
That minimum package of care is yet to be determined by a bill in Congress.

Non-citizen worker?
IF you are paying into the Social Security fund, you get health benefits from Social Security. If not you have to go some where else, but if you show up at a county hospital, they are going to sell you the U.S. Healthcare Policy and contact your employer. We might need to ADD a group of IRS collection agents to enforce the collection of Social Security and Tax funds.

How does this affect my employer ?
They don’t have to offer health insurance. They get out of the health insurance business and leave it to the government and insurance companies. They simply do what they are doing now: collect the revenue for the IRS to pay social security. If they are NOT doing that much now, then the IRS will investigate why they are not collecting wage taxes and healthcare and Social Security funds.

Who pays my medical bills at the doctor’s office?
That remains to be determined by a bill in Congress.
Doctors seem to work it to be a single payer so they can eliminate all those staffers working the insurance paperwork (43% administrative cost by some estimates) and that would be Social Security.

What about Medicare and Medicaid?
They would not exist anymore. Might save some tax money there. Might not. It would roll into Social Security and not fall on the States and Counties. You would not be taxes locally for healthcare benefits for the elderly , retired, infirmed, disable or kids without health insurance.

Won’t this destroy our healthcare system as we know it today?
No.
Your employer will save money and do nothing new with existing staff.
Your employer will not be paying you in health care benefits, they could pay you MORE money or hire MORE people or INVEST more. Your employer will stop trying to eliminate older workers, because it increases their health insurance rates. Your employer will be MORE COMPETITIVE in the world market, with healthier, more productive workers.

Your doctor will save money and do nothing new with reduced staff.
Your hospital will save money and do nothing new with reduced staff.

You will still be REQUIRED to pay for healthcare, social security, and taxes.
You might get paid more. You might not. IF you did not have healthcare before the bill in Congress passes, you will have it now. You will have to pay for it, so you might see that come out of your paycheck each month. You will have to work harder to pay for it. There is no free lunch.

Why will I be required to pay for it?
At one level, it is the same reason you are supposed to be paying taxes and social security benefit payments now.
At another level, it broads the base of insured people for insurance companies to get paid by and to spread out the benefits and risks over.
As a group of people, there is only one percent ( fact check) chance that someone will die of cancer and heart disease. It goes up or down for a specific person. If everyone is insured, the total costs of healthcare for a single individual goes down.


And, your health insurance companies will still be around getting rich.
It is still to be determined by a bill in Congress, but why wouldn’t they.
They will still be getting $357 per month per working person.
NOW, they will be paid for ALL working persons.
The payment will be guaranteed by the U.S. Treasury through the Social Security Service. The market for insurance will be bigger. The risks of payment will be reduced.
The risk of insuring an individual will be spread over the entire working population.


Using that car payment analogy once again, my Rich Uncle never pays for a NEW car.
Why? you ask.
He told me the other day that if I were to SAVE and INVEST that car payment of $357 per month in something that earned a compounded, interest rate of 5% (good luck with that one!) for 30 years, I would have $1.2 million dollars. Your health insurance company is going to make money and still pay all the medical bills, that is their job and role in life. God bless America.