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Monday, May 17, 2010

A Legislative Policy Proposal: The Silver Pennant Health Care Reform Plan

Real Reform Now Project (tm)

By JC Leahy,  RN, BSN, MA, ACLS
Sigma Theta Tau's "100 Most Extraordinary Nurses" Award

We'll need a successful election first, but complete repeal of the Democratic health care law  is actually necessary.  There are 3 critical flaws to the Obama/Pelosi health care law: (1) it's bad -- as in "good" and "bad" -- (2) it won't work, and (3) it will contribute significantly to impoverishing America. The term "bad" includes (1) unjust (2) oppressive (3) passed in a corrupt manner, and (4) counter the the fundamental principles of government in America. "Won't work" includes supply-demand curve argument AND has been weighed and measured in the crucible of experience and been found utterly wanting. I shall write a separate article to support each of these points. The problem with Republicans is that many of them stand for the-same-thing-as-Progressve-Democrats-but-less-of-it  (which is a losing proposition), AND they lack a comprehensive health care solution of their own. I support the Silver Pennant Plan as an alternative. I believe that no congressional representative or senator should be elected  to office who will not pledge to enact this plan.  You may call this the Silver Pennant Pledge." -- JC Leahy


Instead of spending billions of dollars per year constructing a bureaucracy to dictate what health care we may have, when we may have it, and how we must pay for it -- take those billions of dollars annually and place them into our own individual savings or investment accounts. As families and individuals, we'll take care of selecting and purchasing our own health care. This will accomplish for healthcare planning what the 401(k) and IRA accomplished for retirement planning -- but in an even more powerful way!!!  It will cost less, we'll get exactly the health care we, individually most value, and we will be, as Milton Friedman put it, "free to choose"!!!!  (PS - If you want an alternative health care plan, hit the "donate" button to the left with any amount.)

Benefits Summary (click here)


Congress shall pass a bill enabling the following. The length of this bill shall not exceed 200 pages.

1. Repeal Democrat Party Health Care "Reform": Public Law 111-148 and all of its amendments.

2. Finance health care reform by cutting taxes in the following way and allow the people to keep and mange these funds for health care. Combine the features of the regular IRA, Roth IRA, 401(k) and Health Care Flexible Savings Account as follows:

2A. Reform Health Flexible Savings Accounts (FSA's) by removing the use-it-or-lose-it "poison pill" provisions. (What is an FSA? Click here!) Free these health savings to be carried forward from year to year without limit, instead of being confiscated annually (as they currently are) by the institution into which they have been deposited. This will provide employees with a federal income-tax AND payroll-tax reduction if they save for health care, and will allow them to retain money saved for future health care needs. People will be free to manage funds in these accounts exactly as they currently manage IRA funds.

2B. Create Corresponding Plans for the Self Employed . Like an FSA, money saved by self employed persons for health care will provide tax reductions in exchange for health care savings. People will keep the funds from tax savings in their own health-care-dedicated accounts. There will be no use-it-or-lose-it "poison pill" provisions. Money deposited to such a plan may be deposited with any of the institutions that can serve as IRA custodians, including banks. 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 as a deduction on the business page of the tax return; namely, the Schedule C. Thus, the self-employed entrepreneur will receive reductions in both state and federal income taxes and also a reduction in 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, to the banking sector, to health care in America, and to employment for all Americans!!! Because small business provides the vast majority of jobs, it will be a shot in the arm to employment in America.)

2C. Provide Strong Incentive to Save for Health Care: Collectively, the accounts contemplated in #2A and #2B we will call, Hyper Flexible Savings Accounts (HFSA). Every man, woman, and child in America who is legally employed will be highly incentivized to contribute not less that 9% and not more than 20% of gross earnings to an HFSA account. Every self-employed person will be likewise incentivized to deposit the same percentages to HFSA account based on Schedule C gross margin, but only to the extent that there is a business net profit. HFSA savings incentives are to be as follows:

In a fashion similar to a regular IRA or 401k, HFSA accounts will provide immediate tax savings. These immediate tax savings will be greater than those of an IRA because there will be a payroll tax (or self employment tax) savings in addition to saving of federal income tax.

In a fashion similar to a ROTH IRA, expenditures from an HFSA will never be subject to income tax, provided that the expenditures are for health care.

Anyone who chooses to NOT save to an HFSA at least 9% of employment income, or 9% of self employment gross margin, will be subject to a supplemental Medicare tax equal to 9% of that income.

3. Provide for Management and Expenditure of Health Care Savings -As with many existing FSA's, a VISA-like smart debit card will be used to spend from the new HFSA accounts. This debit card will be spendable exclusively at places that sell health care services or products. For example, your debit card could be used at a hospital, a doctor's office, a healthcare-only web site, or a healthcare-only counter at a local pharmacy. Using a smart debit card will free doctors and hospitals of their claims-processing nightmare. Insurance administration costs will fall to near zero.

4. Provide for Control by the Little People - At their owners' discretion, HFSA savings may be used to pay not only for one's own health care expenses, but also health care of one's spouse, or child, or brother, or niece, or mother-in-law, or lover, or significant other, or neighbor, or anyone. The only restrictions will be that (1) funds may only be used for health care, and (2) the owner of the funds may not receive any sort of goods, services, tax deductions, or other kickbacks for paying others' health care expenses.

6. Provide for freedom of choice and tax-free payment of health insurance premiums -

Current Situation: Currently, the IRS does not generally permit funds from Flexible Savings Accounts to be spent on health insurance premiums. At the same time, 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. It also, effectively, forces employees to accept whatever health insurance plan their employer chooses to offer.

Silver Pennant Changes: Liberate people to select any health insurance plan available on the market and pay its premiums with tax-free money from his/her HFSA account! (The only exception will be that employer provided plans which already entail tax-free income to the employee cannot be paid for with an HFSA account.) Also, State restrictions on the purchasing health insurance across state lines will be declared invalid, allowing people to shop the entire nation for the best health care insurance.

7. Catastrophic Health Care Insurance - Everyone who has an HFSA, as a condition of the HFSA, must have private catastrophic health care insurance. 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 $2,000 per person or 5% of the beginning-of-year balance of their HFSA, whichever is higher. The $2,000 amount will be indexed for inflation each year. This universal, mandatory private catastrophic health care insurance will protect people from financial wipeout. The cost to Government will be around zero. Catastrophic health insurance will be the ONLY type of health insurance anyone will be required to maintain. For those who don't like requirements, note please that this is not really a "requirement", as such, but rather a condition to qualify for a tax break -- just as there are conditions attached to every other tax break that exists. There will also be an exception for those who accumulate very large balances in their HFSA accounts. 

8. Simple Tort Reform - A shockingly large percent of health care services are performed not for clinical expediency but to protect health care providers from malpractice lawyers. Congress will reform this paradigm by legislating that if anyone brings any action in any Federal court or administrative forum which involves allegation of malpractice or negligence, and he fails to win on at least one, single allegation, he will pay half of the defendant's legal fees and other associated costs. In this way, litigants with obviously valid claims will be free to pursue them, but others will think twice about initiating frivolous proceedings. We, the people, must force our individual state governments enact that identical rule for state courts. (Stop here and  read that last sentence again, please.)

10 Transform the Self Employed Health Insurance Deduction - The HFSA replaces the Self Employed Health Insurance Deduction.

11. Maintain and Strengthen Medicare-Medicaid -We can preserve Medicare and Medicaid with the following just and simple rule: Anyone who has money in an HFSA must use that money before tapping Medicare or Medicaid. As younger people over time build huge account balances in their HFSA's, this will relieve pressure on Medicare-Medicaid resources, and save the safety net for those who actually need it.

12. Establish a commission to evaluate existing barriers to education of physician specialists, and to propose measures to better enable medical students to enter the specialty of their choice.


Here are some important benefits of the Silver Pennant Plan

** Complete portability when you change jobs.

** No exclusion of preexisting conditions

** YOU, not bureaucrats, decide what is covered.

** No new Federal bureaucrats are required.

** Medicare is strengthened and preserved, not raided.

** Our childrens' future is not mortgaged to foreign creditors.

** Employers become more free to create jobs.

** Health care prices are controlled by supply and demand.

** Wealth is safeguarded by private ownership.


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. YES WE CAN!!!!