American Healthcare Reform How to save a $Trillion a year.

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The MSA in Medicare 

The Blueprint of Republican Health Care Reform 

Prosperity for America

Lifting the cost of health insurance off the backs of American employers will make our economy soar like never before. America needs a salesman to sell the idea of American healthcare reform so our Nation can begin our healing process. Defined Contributions are exactly what the doctor ordered. America needs more options, more choices and more freedom, including expanding MSA plans. Defined Contribution plans will empower Americans to save premiums, eliminate taxes and build wealth. Modernizing our inefficient healthcare system with American Healthcare Reform will make America great again. 

The Cost of Health Insurance to Taxpayers

In 2021, the government spent $1.65 Trillion of the $4.2 trillion total spent on Health Care Programs. We are spending approximately $12,900 a year per person in the United States for health Care Programs. Taxpayer costs are estimated to grow to $3 trillion of the estimated $5.5 Trillion total spent per year by 2025. This is not sustainable and is the #1 cause of our escalating debt. If we don’t find a way to control these costs, we will never be able to pay down our debt. The way to slow the out of control increases of health costs is to offer an alternative to the way our government subsidies our current healthcare system. The government needs to offer a choice to individuals to either keep their traditional Defined Benefit program (Employer Sponsored Insurance, Medicare, Medicaid/Chip) or voluntarily accepts an alternative Defined Contribution program. The MSA in Medicare is the Blueprint for just such a paradigm shift on how we finance our health care system.

Government Current Defined Benefit Expenditures

Our Current Health Care system is made up of Defined Benefit Plans. Medicare, Medicaid, CHIP, Employer sponsored, and ACA Tax Credits are all Defined Benefit Plans. This means premiums are paid for a specific set of covered supplies or services. The taxpayer cost of these programs in 2021 (the latest information available) are as follows.

· Medicare $900 Billion

· Medicaid $724 Billion

· CHIP $22 Billion

· Government Subsidies of Employer sponsored Insurance $280 Billion

· Government Contribution to Employer-Sponsored Insurance Premiums $36 Billion

· Retiree Drug Subsidy Payments to Employer Sponsored Insurance Plans $10 Billion

· ACA tax credits $36 Billion

How the MSA in Medicare works

Medicare MSAs were first proposed as a limited demonstration program in the Balanced Budget Act of 1997. In 2003, the Medicare Modernization Act made MSA Plans permanent. 2007 was the first year that MSAs were available to the public. Today there are approximately 10,000 Medicare MSA plans in the United States. The MSA in Medicare is a Medicare Advantage plan approved by CMS and offered by private insurance companies. Currently there is only one company offering the MSA from coast to coast and is operating in 35 states and expanding to several more in 2023. 

How the Program works. Medicare pays a premium to the insurance company on behalf of the insured. This premium varies geographically and for many other reasons but is approximately $1,100 per member per month.  On average Medicare pays about $13,000 a year per member to the Insurance company. The insurance company sets a deductible that must meet IRS guidelines as a HDHP (High Deductible Health Plan). The insured must meet the deductible set by the insurance company before the insurance company starts paying the medical bills. The insurance company must take part of the premium paid by Medicare and deposit some funds into the insureds Medical Savings Account (MSA). One of the programs offered in the 35 states is a $5,000 deductible. Once the insured meets the annual $5,000 deductible then the insurance company pays 100% of the Medicare Covered Charges. The insurance company also establishes an MSA at a bank and deposits $2,000 into the insureds Savings Account. The insured is free to use the $2,000 on health care expenses or save and invest the funds. Any funds not used by the insured roll over the following year and another $2,000 is deposited into the insureds account. This allows for the potential to build a sizeable asset and save funds for future healthcare expenses. 

Alternative Defined Contribution

Government Provided MSA plans. 

On February 28th, 2017, President Trump’s remarks to a Joint Session of Congress included, “We should help Americans purchase their own coverage through the use of tax credits and expanded Health Savings Accounts - but it must be the plan they want, not the plan forced on them by our government… We should give our great state governors the resources and flexibility they need with Medicaid to make sure no one is left out”.

MSA Solution 

the blueprint for age-based tax credits.

The government provides the funds for everyone to have an option to join an MSA plan. The MSA plan would provide the same type of plan for insureds under 65 as it does for insureds over 65. The government reimbursement would be based on the age of the insureds as follows. Everyone would have a $5,000 deductible with a participating Insurance company, The Insurance company would deposit $2,000 of the funds they were paid into the individuals MSA account each year:

· 0 – 19-year-olds make up 25% of the population with an average yearly health care cost of $3,300. Insurance companies would be reimbursed $7,000 per person in this age group for a total cost of approximately $510 Billion. This would leave the insurance industry with approximately 425 Billon in surplus after paying claims.

· 29-49 -years old’s make up 35% of the population with an average yearly health care cost of $4,400 Insurance companies would be reimbursed $7,500 per person in this age group for a total cost of approximately $866 Billion This would leave the insurance industry with approximately 575 Billon in surplus after paying claims.

· 49 – 64-years old’s make up 26% of the population with an average yearly health care cost of $9,513 per year. Insurance companies would be reimbursed $12,000 per person in this age group for a total cost of approximately $1.03 Trillion. This would leave the insurance industry with approximately 387 Billon in surplus after paying claims.

· 65 – 84 -years old’s make up 12% of the population with an average yearly health care cost of $16,000 Insurance companies would be reimbursed $14,000 per person in this age group for a total cost of approximately $560 Billion This would leave the insurance industry with approximately 40 Billon in losses after paying claims.

· 84+ -years old’s make up 2 % of the population with an average yearly health care cost of $32,000. Insurance companies would be reimbursed $15,000 per person in this age group for a total cost of approximately $297 Billion. This would leave the insurance industry with approximately 99 Billon in losses after paying claims.

· Total cost of the insurance Premiums and the MSA deposits for the United States population of 330 million people would be approximately 3.2 trillion. With surpluses to the insurance industry of $1,3 trillion after paying claims.

Although MSA plans do not cover Prescriptions the estimated 388 billion cost is figured into the average yearly costs of insureds and Medicare. The solution to this is to allow MSA plans to include RX coverage. 

This program would allow for significant savings over our current system and allow most of the population to build significant wealth over their lifetime of savings. 

Conclusion

The 3.2 trillion annual cost of this program is 1 trillion less than the current 4.2 trillion being spent.

Age based tax credits will eventually eliminate and replace all other government and employer defined benefit programs.  

Allow our young to have substantial savings built up over 60 years to pay for their future health care needs.