By Nurse JC Leahy
RN, BSN, MA, ACLS
Question: Who is JC Leahy, and why should I listen to him about health care reform?
Answer: JC Leahy is a hospital registered nurse masters-educated accountant Federal income tax expert. Hmm....that’s unusual. So let’s just hear what this guy has to say.We the People, in order secure for ourselves and our decedents, liberty to choose our health-care destinies, demand a more sustainable health care system that gives us fair service for fair price, and we demand a health care system that lets each of us, with the advice of our doctors and families, secure our own health care destinies in accordance with our own freedom of choice!!
THE PLAN -- Your humble nurse recommends revolution, a non-violent revolution of the People. I recommend that each of us throw off our Clark Kent suits and become individual super heroes fighting for this just cause. Here’s the plan. For want of a better name, I’ll call this the Leahy Plan:
1. Reform Health Care Cafeteria Plans – Congress already allows employees to save pre-tax money for their health care expenses through what they call a Flexible Spending Account (FSA). Money is simply withheld from your paycheck and never gets taxed - ever. It goes into a savings account that you may spend. This reduces your income taxes and gives you tax-free savings to pay medical bills. Many employers make these plans available. There is little or no cost to the employers. At my work, for example, I can sock away $5,000 per year tax-free. The catch is that the Lex Luthors of Congress have embedded a poison pill in Flexible Spending Accounts. If I don’t spend every cent of my $5,000 by the end of each year, it is confiscated!! I lose it!! The company that admiisters the FSA gets to keep my money!! What a sick ripoff!! We need to remove the use-it-or-lose-it provisions of health care FSA's! Let unused balances carry forward with no more poison pills, and let them be managed by the employees just like they manage their 401k’s.
2. Create Corresponding Plans for the Self Employed - Set up health savings plans for the self employed which correspond to the health care cafeteria plans for employees. Money deposited to such a plan may be deposited with any of the institutions that can be IRA custodians, including banks. The savings balances will be a powerful shot in the arm to banking and the rest of the beleaguered financial sector. To the extent that the self-employed person has a profit, money deposited to such a plan will be a deductible expense that will appear on the business page of the tax return – the Schedule C. Thus, the self-employed entrepreneur will save on state and federal income taxes and also self-employment taxes. Don’t believe anyone who tells you we have tried this before. Nothing like this has ever been tried! This will be a powerful shot in the arm to the small-business sector. Because small business provides the vast majority of jobs, it will be a shot in the arm to employment in America.
3. Mandate Health Care Savings - Collectively, the plans contemplated in #1 and #2 we will call, for want of a better name, Neighbor Bill Accounts. Every man, woman, and child in America who is legally employed will be required to contribute not less that 10% and not more than 15% of his gross earnings to a Neighbor Bill Account. Every self-employed person will be required to deposit the same percentages to Neighbor Bill Account based on Schedule C gross margin, but only to the extent that there is a business net profit.
4. Provide for Management and Expenditure of Health Care Savings - We will be free to manage and invest our Neighbor Bill Account funds just like 401k’s. If we die, the funds will pass to our heirs. If we wish to spend money for health care, we will use a special VISA debit card. This VISA debit card will be spendable exclusively at places that exclusively sell health care services or products. For example, your VISA debit card could be used at a hospital, a doctor’s office, a healthcare-only website, or a healthcare-only counter at a local pharmacy. Using a simple VISA card will free doctors and hospitals of their claims-processing nightmare. Insurance administration costs will fall to near zero.
5. Provide for Control by the Little People - At their owners’ discretion, Neighbor Bill Accounts may be used to pay for one’s own health care expenses – or one’s spouse, or child, or brother, or niece, or mother-in-law, or lover, or significant other, or even for the health care expenses of a neighbor. The only restrictions will be that (1) funds may only be used for health care, (2) with an important exception I’ll detail below, funds may not be used to pay health insurance premiums, and (3) the owner of the funds may not receive any sort of goods, services, tax deductions, or other kickbacks for paying others’ health care expenses. The reward for such payments is simply not to be in this world.
6 Tax Employer-Provided Health Insurance - Currently, if an employer provides health insurance to employees, the employer is allowed a tax write off for 100% of the insurance cost; and, the employee does not have to include the corresponding amount in his taxable income. This asymmetry is unusual in the tax code and amounts to a special subsidy of employer provided third-party-reimbursement-type health care. This subsidy has created the current societal reliance on employer-provided health insurance. Remove the subsidy. This will gradually free employers of their nightmarish burden of health care costs In the meantime, it will also generate tax revenues.
7 Mandatory Catastrophic Health Care Insurance - Every man, woman, and child in America who has a Neighbor Bill Account must pay for private catastrophic health care insurance. This is the only type of insurance premium that may be paid out of Neighbor Bill Account funds. People with families must have policies that cover their children and non-working spouses. Health care expenses in excess of a high deductible amount will be covered in full by these insurance policies. The annual deductible amount will be $10,000 per person or 5% of the beginning-of-year balance of their Neighbor Bill Account, whichever is higher. The $10,000 amount will be indexed for inflation each year. This universal, mandatory private catastrophic health care insurance will be a shot in the arm to the beleaguered insurance industry while protecting the little people from financial wipe-out. The cost to Government will be around zero.
8 Simple Tort Reform - A shockingly large percent of health care services are performed not for clinical expediency but to shelter providers from malpractice trial lawyers. This artificially increases demand for health care services, mis-allocates resources, and drives up prices Additionally, the cost of malpractice insurance and huge malpractice awards drive up prices for health care. Congress will reform this paradigm by simply legislating that if you sue anyone in Federal court for malpractice or negligence, and you fail to win on at least one single point, you will pay half of the defendant’s legal fees and other associated costs This way, people with slam-dunk-valid claims will be free to pursue them in court, but others will think twice before filing frivolous lawsuits. We, the Clark Kents of America, must force our individual state governments enact that identical rule for state courts.
9. Restrict Employer Write off of Health Insurance Expenses - Currently, certain business expenses are not fully deductible for income taxes. For example, business meals generally are only 50% deductible. In like way, make the employer’s expense for employee health insurance only 50% deductible. This will produce tax revenues and gradually encourage the shift away from employer-provided third-party-payment plans to individually-controlled-and-safeguarded Neighbor Bill Accounts.
10 Abolish the Self Employed Health Insurance Deduction - The Neighbor Bill Account deduction replaces the Self Employed Health Insurance Deduction. The former encourages third-party-payment plans, while the latter is individually controlled.
11 Maintain and Strengthen Medicare-Medicaid - Medicare and Medicaid must continue to be the safety nets for those who need them. However, Medicare and Medicaid are ripe for eventual collapse because (1) the population is aging, and (2) they are third-party-payment plans. We can save Medicare and Medicaid with the following just and simple rule: Anyone who has a balance in a Neighbor Bill Account must use those funds before tapping Medicare or Medicaid. This will relieve pressure on Medicare-Medicaid resources, and save the safety nets for those who need them.
The Leahy Plan will gently sweep away our failed health-care financing system. The royalty of the health care financing will be de-throned. The future will be free to blossom. Vast sums of money will be set aside for health care and safeguarded by vigilant owners. Catastrophic health insurance will protect us from financial wipe-out. Medicare and Medicaid will protect the poor and the elderly. Most payment processing will be as simple as swiping a VISA card. The little people will spend or save health care resources as they think wise. They will never again be told that treatment they desperately need is not covered by the plan, or can only be obtained by lengthy waiting for complicated appeals. Employers will no longer stagger under the burden of health care costs. Job-creating small employers will get their second wind from a reduction of their income and self-employment taxes. Large employers, over time, will have the crushing burden of employee health care expenses lifted from their shoulders. Medicare and Medicaid will be secured. Doctors and hospitals will be cured of the expensive headache of filing and collecting insurance claims. They will, however, need to produce price estimates and bills that patients can understand and accept.
The future is exciting. It only requires is that you – personally – somehow, in your own way, with your own talents, stop masquerading Clark Kent, get off your haunches and make it happen – starting now, starting today. To Nancy Pelosi, Barack Obama and Hillary Clinton, we must say: YES WE CAN!!!!