Replacing Obamacare

Health Insurance worked best before the 1962, before Vatican II.  Catholic Nuns ran their hospitals and raised funds to hire the best doctors, buy equipment and expand facilities. Other churches and charitable groups like the Shriners did the same. The cost of a hospital room was $24 per day and the cost of individual Blue Cross was under $25 per month.  When the Nuns left after Vatican II, they sold their hospitals to private companies and things got pricy. Before 1962, hospitals established their fees based on their actual costs. After these hospitals were sold, the new management started establishing their fees based on what they could get away with.

Health Insurance was largely employer sponsored. Many companies were self-insured; they established Medical Trusts, offered their own coverage options (if any), had these claims administered by a third-party-administrator and costs were low.  Many other companies continued to buy their Medical Insurance from Insurance Companies and would secure bids every year.

I worked in St. Louis from 1965 to 1975. I left Monsanto in 1971 and joined Washington University to establish the Personnel function at the Medical Campus. I defeated the SEU organizing attempt at the Medical Campus. I became friends with a lot of the Medical Faculty and got some insights to where healthcare was going. Medical equipment was the future and it was going to get expensive. My grandfather was an MD and graduated first in his class in 1905 from Barnes Medical College that later became Washington University Medical School. He was appointed Professor of Internal Medicine when he graduated. He was a master diagnostician and surgeon and he did this with very limited equipment, so I had a hard time believing that American Medicine was headed in the right direction. Malpractice costs would add to the problems.

Reagan had to compromise with the Democrats to get his tax cut passed and in 1986 it was clear that Insurance Companies wanted to take over. The word went out to law firms to advise companies to drop their self-insurance Trusts and buy medical insurance from the Insurance Companies.

In 1983, I dropped the Insurance Company plan for Hayes Microcomputer Products, Inc. and set up a self-funded Medical Insurance Trust and saved a bundle. We had 1000 employees when I left.

In 1986, I joined Electromagnetic Sciences Inc. and they had a self-insurance Medical Insurance Trust and I became the Trustee.  I rewrote parts of the Plan to avoid price gouging for addiction treatment and put in a “gatekeeper” and a nurse-practitioner to work with the high cost families

In 1990, IRS 502 deductions were neutered by the Individual Tax form.  We could no longer deduct 100% of our medical expenses on our Individual Tax Forms. We were ordered to go to “annual election of benefits”.  We were allowed to have pre-tax treatment of our employee paid portion of our Medical Insurance and a starter version of a Medical Savings Account. The bureaucracy for handling Medical Insurance was exploding. Also HIPPA passed and that was a farce.

By 1993, the total cost of the self-funded Medical Insurance Trust was $150 per month per employee and we had about 1000 employees. The cost of switching to an Insurance Company was much higher.

In 1993, I was recruited to start a private consulting practice for Atlanta Electronics Companies and worked with 45 of these companies over the years.  I saw medical costs rise over those years to levels that were anything but reasonable.

I remained on the Board of the American Electronics association and wrote their position paper opposing Hillary-Care in 1993.

I watched in disbelief at the passage of Obamacare in 2009 and witnessed the destruction of US Medicine. Medical Insurance had always included “medical necessity” as its criterion for payment. The job of medicine was to rescue and repair. Preventing medical problems had always been the responsibility of the patient.  County Medical Associations could suspend and revoke licenses if malpractice occurred.

So, now here we are. Medical costs have gone far beyond the price/demand curve. Heavy subsidies and regulations by government and predatory Malpractice lawyers have moved the price of medical care off the charts.  Like education and government, medical care is overpriced and underperforming.

Norb Leahy, Dunwoody GA Tea Party Leader