Addressing the Issue of Cost and Payment

“Human right” is a rather ambiguous term in heath care arena. Some believe that a human right is only applicable on an individual basis, while others believe it can be applied to a large cohesive group of people. Being supporters of the later means that we believe health care should be equally accessible, equally coordinated, equally executed, and equally affordable for every US citizen.

If we were to take the amount of money that was spent on healthcare in 2002 and divide it amongst the entire US population, every person would have to shell out $5,267.1 Albeit an equal contribution, this sum of money (depending on your income and lifestyle) could equate to an entire year’s worth of food and rent for your family or a one night’s stay at the Jumeirah Emirates Towers in Dubai. This being said, we need to seriously reevaluate the definition of “equal”. Many reform proposals focus on equal contributions by all US citizens – either to the government or to private insurance companies through an employer in order to cover the cost of healthcare. Instead, what is needed is a system that is truly equal.

Currently, the US has a largely fragmented system that relies heavily upon intermediates and paying them to make the healthcare system more complicated than it needs to be – through separation of allocation and redistribution.2 A stronger foundation could be created through the establishment of non-governmental agencies the collection of “ailment funds”. The government would need to intervene by introducing 3 or 4 main insurers for the entire nation. The insurers would need to guarantee coverage to every employed person in the United States. The private insurers would have to guarantee unconditional coverage through all 50 states for trauma, emergency care, and acute care. All other health care and maintenance care would have to be provided within the person’s geographic vicinity. The private insurers would directly collect financial resources through the establishment of “ailment funds” which would be financed through payroll contribution based on the following schedule:

Gross income per year: Below $28,000
Employee’s percent contribution to ailment funds: 2.5%
Employer’s percent contribution to ailment funds: 4.5%

Gross income per year:$28,000 – $35,999
Employee’s percent contribution to ailment funds: 3.0%
Employer’s percent contribution to ailment funds: 4.0%

Gross income per year: $36,000 – $43,999
Employee’s percent contribution to ailment funds: 3.5%
Employer’s percent contribution to ailment funds: 3.5%

Gross income per year: $44,000 – $51,999
Employee’s percent contribution to ailment funds: 4.0%
Employer’s percent contribution to ailment funds: 3.0%

Gross income per year: $52,000 – $59,999
Employee’s percent contribution to ailment funds: 4.5%
Employer’s percent contribution to ailment funds: 2.5%

Gross income per year: $60,000 – $67,999
Employee’s percent contribution to ailment funds: 5.0%
Employer’s percent contribution to ailment funds: 2.0%

Gross income per year: $76,000 – $83,999
Employee’s percent contribution to ailment funds: 6.0%
Employer’s percent contribution to ailment funds: 2.0%

Gross income per year: $84,000 – $91,999
Employee’s percent contribution to ailment funds: 6.5%
Employer’s percent contribution to ailment funds: 2.0%

Gross income per year: above $92,000
Employee’s percent contribution to ailment funds: 7.0%
Employer’s percent contribution to ailment funds: 2.0%

Using this schedule of contribution would essentially create enough funds on a yearly basis to cover the “equal” yearly contribution of $5,267 per person for the same quality of care as previously established. The private insurers would compete with each other based on the types of services they provide and all citizens would have the option of choosing which insurer their ailment funds would go to. This would essentially create more of a free market and would result in lower, more competitive payment on therapeutically equivalent services that could lower overall costs.

The concept of “sickness funds” or an “ailment fund” system has been utilized in both Germany and France.3 In both countries, the government has the power to regulate the insurers. Through regulation, standardization of payment, and expenditure caps – a higher level of cost containment can be achieved.4 Although the government will have more involvement than some would like, its participation in healthcare reform is absolutely necessary to guarantee its success. This system obviously focuses on an “equal” contribution on the part of high-income citizens. But our liberal philosophy stresses the importance of being able to provide care to all if it means making a select few unhappy. As a country, we need to move away from individualistic thinking and aim for population-centered solutions.

1. Anderson GF, Hussey PS, Frogner BK, Waters HR. Health spending in the United States and the rest of the industrialized world. Health Aff (Millwood). 2005;24:903-14. [PMID: 16136632].

2. Claxton G. How Private Insurance Works: A Primer. Menlo Park, CA: Kaiser Family Foundation; 2002. Accessed at www.kff.org/insurance/upload/How-Private-Insurance-Works-A-Primer-Report.pdf on 26 February 2009

3. Anderson GF, Reinhardt UE, Hussey PS, Petrosyan V. It's the prices, stupid: why the United States is so different from other countries. Health Aff (Millwood). 2003;22:89-105. [PMID: 12757275].

4. White J. Competing Solutions: American Health Care Proposals and International Experience. Washington, DC: Brookings Institution; 1995.