Can Americans Self-Fund Their Health Care?

This video provides an explanation of the high level analysis that evaluates whether Americans can save enough money in their lifetimes to pay for their own health care. It’s a first-pass at identifying the dollars Americans contribute into the system with a comparison to what we spend per capita on health care in a given year. The analysis is in my Amazon Bestselling book Health Care: Meet the American Dream. Click here to see the video.

Below is text from the video. It has been edited to remove some extraneous words and may include grammatical errors that result from conversational speaking.

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The Longitudinal Health Care Plan represents the complete decentralization of the health care payment system. The idea is that Americans would save enough money in their own personal investment accounts to pay for their health care needs over the course of their lives. This level of personal financial responsibility can be terrifying. And in order for the LHCP concept to be accepted, we have to get a little more comfortable with this idea. We have become so removed from what our health care needs are and what anything actually costs that the idea that would be able to self-fund is almost inconceivable.

So before we get into the details of the mechanics of how that could happen, I want to hearken back to the fact that this idea is based on the principles of the American Dream. Those ideas of personal accountability, responsibility, your job as a citizen, your civic responsibility to care for yourself. These are the ideas that have helped mold the creation of this LHCP.

If you think about it, we pay for our housing. We pay for our food. We pay for transportation, our car. If we’re not paying for our health care, then then who is? Where is the money coming from? And it was important for me to articulate a little more where the money comes from so we can start to get comfortable with this idea that we can fund our own health care.

In the book, there’s a sort of business case around trying to address this idea. And what I tried to capture all the areas where a typical American, an average American, contributes money into the system and compare that to what is spent. And in the end, at a very, very high level, those numbers are basically the same. So strategically, high level, this concept can work.

Drilling down a little more, I took an average American salary. I looked at what they contribute into the health care system as far as premium payments. I looked at what they typically pay outside of that, captured what their Medicare payroll tax would be, looked at what their employer puts in for them on their behalf into the health care system. Added all that up. It’s about $10,000 a year.

Then I looked at how much money is spent in the health care system. So in 2016 it was $3.3 trillion. Divided that by the number of Americans, about 325 million people, and you get an average cost per capita that’s around $10,000. So the numbers kind of match. And this is important.

Obviously, we need to make a lot more of a detailed analysis of it. There’s an incredible income inequality in America. There are health disparities in America. There are gonna be all kinds of cases where these averages don’t apply. But from my work doing business cases for 20-odd years, if the sort of thumbnail, pie in the sky figure, at a high level, is in the ballpark, then odds are, the ideas can work. So that was one of the key takeaways in doing this sort of high-level business case – was to get people to start to get comfortable with the idea that it can work.

The second idea really gets to this roadmap of bringing this idea to reality. And we have to start thinking about what dollars are actually gonna go into the LHCP. Where is all this funding gonna come from? Because we’re so removed from how we spend our health care dollars today. So it was important to capture that and I think one of the key takeaways at this point, going forward, is to recognize the incredible contribution that employers make on behalf of their employees into the health care system. Their role, I think, is going to evolve over time. But in order for the LHCP to work, the individuals are going to need access to the money that the employers are contributing on their behalf into health insurance systems. So I think we’ll hear a lot more about that.

And I hope as conversations continue about this, folks will get a little more comfortable about the idea that we can fund our own health care.

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