
                     THE MEDICAL CARE PROBLEM 

                            Pat Rooney 

               The proposal expressed by Pat Rooney 
         in the following article is a unique alternative 
           to the present ways of paying for healthcare 
                      in the United States. 


   EVERYONE wants to fix the healthcare crisis. Last year, we 
spent 12.2 percent of America's Gross National Product (GNP) on 
healthcare. We are expected to spend 13.9 percent next year and 
16.5 percent by 1995. 

   The problem is twofold: (1) the ultimate cost and (2) the high 
number of uninsured people. The reason people are uninsured is 
high cost of health insurance. The largest portion of the 
uninsured are the young and healthy who simply do not want to 
spend that much money for insurance. 

   There is a solution! It involves restoring the normal 
discipline of the marketplace. 

   A former professor at the University of Michigan has 
recommended that employers buy for their employees a catastrophic 
healthcare plan that would cover everything above, for example, 
$3,000. The savings below the present group insurance cost could 
be put into a Medical Care Savings Account for the benefit of the 
employees and their families. 

   Here's how it would work: The typical employer is spending 
$4,000 or more for a family health insurance program. A plan with 
a $3,000 deductible would cost $1,076. The remainder of the 
$4,000 would be put into a Medical Care Savings Account the first 
year (the exact amount is $2,924). The second year another $3,000 
would be deposited. In three years, they would have almost $9,000 
in the account. Employees would pay out of that account for their 
own medical care for the first $3,000 of medical expenses. Any 
money not paid out for medical care would remain in the account 
and build in the form of a medical IRA. The money would be theirs 
to keep. It would function just like any other IRA. 
[Congressional action would be required to establish a medical 
IRA.] 

   If employees know that the money in their account is theirs to 
keep if it is not spent, employees would turn into wise 
purchasers of medical care. They would suddenly become interested 
in controlling the cost of medical care. It's the only way that 
makes any sense to bring the cost of medical care under control 
in the nation. 

   There are a variety of managed care programs where the 
employer is attempting to manage the care that employees are 
consuming. Or, the employer is hiring an insurance company to 
manage the way employees spend money for their medical care. But, 
managed care doesn't work well because it is not in the self-
interest of the employees. 

   Let's look at the $4,000. The $4,000 is what is typically 
being spent for group insurance for a family in the United States 
(less for a single employee). If your company buys a catastrophic 
plan that covers 100 percent of your medical expenses above 
$3,000, the cost of this insurance would drop from about $4,000 a 
year to about $1,000 a year, with $3,000 a year leftover to go 
into the employee's Medical Care Savings Account. Employers would 
simply be saying to employees, "Here is $3,000 for you to spend 
on medical care, but spend it wisely." If it were the employees' 
money to keep, they would spend it wisely. 

   If instead of medical care, the law had given employers and 
employees a tax break for the employer to pay the employees' 
grocery bill, we could understand the problem. If employees went 
to the grocery store with a credit card issued by the employer, 
they would buy the best and most expensive food.  Why wouldn't 
they? They aren't paying for it! 

   If Congress would enact a law that would allow employers to 
establish Medical Care Savings Accounts, employees would have 
good reason to spend wisely. If an employee needs an operation 
that would cost $3,500, $3,000 of which is their own money, that 
employee would be interested in doing some comparison shopping. 
Possibly, an equivalent service at $2,500 could be found, saving 
the employee $500! 

   Instead of using the insurance industry for managed care, 
which does not work, employers could use the insurance industry 
to provide useful information to employees about alternatives. 

   We know what a giant difference in cost this will make. The 
mass of society will have been changed in buying medical care 
wisely. 

   As it is today, we have a few insurance bureaucrats who are 
interested in buying medical care wisely in order to save the 
employer money, but the employees don't give a hoot. 

   Medical Care Savings Accounts would, first, greatly reduce the 
cost of medical care and, second, would make medical care 
insurance more affordable. People will buy medical care insurance 
if the cost is reduced to an affordable level. Problem solved! 

   In summary, if Congress would enact a law that would allow 
employers to establish Medical Care Savings Accounts, employees 
would have good reason to spend wisely. 

   Medical Care Savings Accounts would greatly reduce the cost of 
medi cal care and make medical care insurance more affordable. 
 _____ 

   J. Patrick Rooney is Chairman of the Board of Golden Rule 
Insurance Company of Lawrenceville, Illinois. Golden Rule, 
licensed to sell insurance in 49 states, believes it is the 
largest underwriter of individual major medical insurance. 

