Self-Insurance, An Alternate solution to Government Takeover?

After the rally, a man came up to grandpa and asked about his health plan.  Grandpa smiled, looked down at me and said,

“Well it looks like at least one person was listening, doesn’t it, boy.”

I smiled back at him as I nodded in agreement.  Grandpa then turned back to the man and said,

“ The whole idea is very simple and it would help out the economy right now more than any government bailout if enough employers switched over to a self-insured option for their employees.  In the last 10 years alone, premiums for health insurance have gone up near 100% for both, the employee and the employer. As reported in my earlier post, “The costs of Health care, it’s too high?”, a man will spend nearly $300 a month for health insurance premiums.  His employer will dish out another $1100 a month.

This does not exclude Medicare either. Medicare premiums have doubled over the last ten years also. we must also remember that Social Security benefits have only risen by about sixty precent over the same period. And this is a plan with price controls as the means to keep health care costs down. We must also consider the fact that many medical professions will not even accept Medicare any more. The Mayo Clinic is one of the most recent that declared that Medicare will no longer be accepted as a method of payment.

Now, we have seen what can happen if a person was to save but 10% of his monthly wages over his lifetime.  If a man were to drop his health insurance policy and self-insure then put that amount in a health savings plan the amount he would accumulate over his life time would be double or approximately 2 million dollars.  Now, how many persons are going to spend that amount or even half that amount of money on health bills?  We’re not finished yet though.

Remember, that employer is also paying a part of those premiums so, let’s offer him and incentive to switch over or to add self-insurance as an option by lowering the amount he pays out for his employees health plan.  Let’s say he contributes half of what he is paying now into that health savings account for each employee.  What happens now?

For one thing, that employee will now have over 5 million dollars in his savings account.  His employer will have an extra 550 dollars a month per employee to invest in the business.  Since this would be considered as new money it would stimulate the economy better than any handouts by the government.

Now, if we were to look at the full potential of this plan we can also see that such a plan would do more to eliminate poverty than any program that the government offers.  The reason being is that such a plan could be offered to the lowest paid person on the payroll without hurting anyone.  It would also allow employers to hire more people thus driving down the unemployment rate that is so high these days.

Now, if this idea sounds good remember that we haven’t even touched on the subject of how government can play a part in this yet.  But we can see from its potential that even with this idea up until now can result in lowering the deficit to the annual budget of the governments, both the state government and the federal government.  And we have only involved the private sector in implementing this idea.

So, my good man do you see any flaws in the plan so far?

The man just grinned and said, "I'm still listening."

Grandpa just chuckled.