Allow Me to Self Insure

Have you ever borrowed money?

From a commercial lender. You go in, you give them your financials, they check your Beacon Score, and you either get your loan, or you don't. Pretty cut and dried.

Let's just put it this way; if you need the money, you won't get a loan.

Financial regulation has increased the cost of lending money. Banks won't give you the type of return on your investment that they have historically, since the cost of money to banks through the Fed are at historical lows. Why would a bank take a risky loan, when they can make money on the spread from fed rates and prime borrowers?

Insurance companies view the market in much the same way. Why insure against risk with a pool of high risk applicants? Let somebody else to it. The cash is in higher returns, not lower returns.

Congress needs to provide an alternative to the current system. The current system rewards large companies who provide their employees with health insurance. Small companies can't afford to pay the kind of insurance premiums that large companies can pay. Health insurance costs are too high for small companies to adopt. But individuals are penalized when they attempt to pay for insurance themselves.

What I suggest is simple. Allow individuals to place money into accounts that are defined as health savings accounts. Any dollar put into such an account would be pre-tax. That is, the amount placed into a health savings account would reduce the taxpayer's annual income. Put in $500 bucks? That five hundred goes in, tax-free. Put in $10,000 bucks? That amount goes on to line 44 of your 1090, and you don't pay tax on that amount of income.

After five years of saving $10,000 bucks a year, you've got a nice little "health nest egg" of $50-thousand plus. Since, for that much cash, banks would be willing to pay interest on your balance. Imagine what slathering would occur if you were an insurance company exec. If you had 50-k of your own cash in the game,what would be the actuarial cost of providing you with "secondary" insurance? Most of the use of your health account would be for small expenses; whether they were annual check-ups, dental procedures, or the occasional bump in the road. You don't access your "insurance" until the funds in your account are depleted.

What would be the annual cost of health insurance, if each of us had $50-thousand in the bank for medical costs?

The additional feature of such an account would be the effect of having such an account during a downturn in the business cycle. If I had an account with fifty to an hundred thousand dollars, and the business cycle was putting business into the tank, I could make a withdrawal against my health savings account, with the penalty of paying the taxes against such withdrawals. Revenue to the government would actually go up as a result. And I would have the cash to continue my business operations; I wouldn't have to fire people, reduce my inventories, or miss payments. it would be my choice, my decision.

I know that politicians think they are smarter than me. They know it. I've heard it. But simple solutions to the health care problem, and how to deal with the "greedy" insurance companies exist. Unfortunately, the system as it is creates a lot of discord. We could end the discord. But why would lobbyists spend hundreds of millions of dollars if we actually fixed the system? ( And how much of those hundreds of millions end up in politicians' pockets?)

Fixing it is easy.

Letting markets work is easy.

You simply have to have faith in people and their own common sense. I believe in your common sense. I'd make a terrible politician.