The New Health Insurance Solution is not about what should or could be done to change health insurance—the legislation and regulations allowing the changes described in this book have already been passed, and the changes are taking place right now.

The sooner you or your company take advantage of these changes, the safer you will be, and the more money you (or your employees) will have for your future health expenses in your Health Savings Account(s).

As illustrated throughout this book, there is a great paradigm shift under way: as a country, we are moving from employer-sponsored group health insurance plans to individual/family health insurance policies, and from wasteful low-deductible “other-people's-money” health plans to efficient, high-deductible “keep-what-you-don't-spend” HSA/HRA health plans.

High-quality discount healthcare is already here: Costco has begun offering individual health insurance, and Target is opening “Minute Clinics” in selected department stores. Customers (i.e., patients) are served on a first-come, first-served basis and are given a pager so they can shop around the store while they wait. Customer satisfaction is much higher than with traditional doctor's office visits .

When LASIK eye surgery first came out in the 1990s it cost $3,000 or more per eye and was performed mostly in hospitals. Because LASIK was not covered by health insurance, it was one of the few major medical procedures subject to free market forces. After only 10 years, in response to popular demand from consumers spending their own money, the quality greatly increased, the price dropped to $500 or less per eye, and the treatment is now mostly performed at convenient retail locations. This is what will eventually happen to most of the U.S. healthcare system.

If everyone purchased at least a high-deductible HSA-qualified policy when they turned 18, almost no one would require state-guaranteed coverage, since a future illness would be covered by a private insurance carrier. Some states are considering mandating that employers withhold wages and/or contribute to defined contributions plans to fund catastrophic health insurance as a condition of employment—just as all states today require drivers to have automobile liability insurance.

The states that take the lead in promoting a competitive individual/family and HSA health insurance marketplace, plus take care of their uninsurables through state-guaranteed coverage, will benefit the most—they will yield increased taxes, employment, and revenues from businesses seeking to locate or expand within their borders.

What Should Be Done Now to Improve Health Insurance?
Major pieces of legislation have already been passed to allow (1) tax-deductible employer-reimbursed individual/family health insurance and (2) high-deductible health insurance with Health Savings Accounts. However, there are six important governmental changes left to complete to ensure better health insurance for every American at less cost.

(1) Allow Health Insurance to Be Sold Across State Lines
Amazingly, because of an outdated federal law passed in 1945, it is currently illegal for a carrier to sell health insurance to an out-of-state individual. If this law were repealed, anyone could purchase a health insurance policy from any carrier in any state. A resident of Maine paying $278 per month for an HSA-qualified single policy could purchase similar coverage from Humana in Michigan for one-fifth the price, $54 a month—saving $2,688 per year.

In 1908, in Detroit, Michigan, when Henry Ford produced the Model T, which cost $825, there were thousands of small auto manufacturers making cars costing $10,000 or more. To protect their own manufacturers, neighboring states passed laws claiming that the Model T was dangerous and thus not allowed to drive on their roads. Eventually, the federal government stepped in and regulated the automobile industry—mandating that any automobile meeting certain minimum standards could be freely driven in every state.

As of this writing, there is a simple 14-page bill in Congress designed to do exactly the same for health insurance, The Health Care Choice Act (H.R. 2355). Opposing this bill are the hundred or so small regional health insurance companies that are terrified of competition and a few overpaid bureaucrats in state insurance departments who would rather see their citizens go uninsured than be able to purchase quality affordable health insurance regulated by someone else.

Allowing consumers to purchase health insurance from carriers in any state will not just increase competition 50-fold and drive down prices; the massive increase in competition will also allow millions more individuals with preexisting conditions to get private health insurance without having to rely on more expensive state-guaranteed coverage.

(2) Make All Health Insurance Premiums Tax Deductible
Also at the time of this writing, a different bill in Congress would make all health insurance premiums tax deductible for individuals, The Health Care Freedom of Choice Act (HR 66).

This extremely simple bill would take away the main reason employers are involved in health insurance and finally level the playing field for all Americans, whether they are employed, self-employed, or unemployed. Overnight, this bill could cut the effective after-tax price of health insurance for consumers 25 to 50 percent.

Making all health insurance premiums tax deductible for all consumers is long overdue—this simple change in our tax code will correct a terrible inequity and eventually return responsibility for health insurance to where it belongs—individuals and government instead of employers.

(3) Make All Healthcare Providers Disclose Prices
As illustrated in Chapter 4, almost all healthcare providers, from major hospitals to individual doctor's offices, charge wildly varying prices for the exact same service depending on the network (PPO) in which the patient is a participant. The same doctor visit might cost a cash-paying immigrant $110, while a person whose employer bargained down the price pays only $42. Hospitals such as the Cleveland Clinic routinely charge one patient $14,367 and another $3,010 for the exact same service.

Healthcare providers and especially pharmaceutical companies should be required to disclose their prices and all discounts given off these prices. Open disclosure will drive consumerism and lower prices for all—plus help stop the terrible way medical providers overcharge their poorest customers 200 to 500 percent.

(4) Allow International Competition for Pharmaceuticals
The peace and prosperity of the United States and the free world is based mostly on free trade with other nations. It is simply ludicrous that the federal government currently does not openly allow, and force the FDA to regulate, the importation of less-expensive, identical brand-name prescription drugs from other countries—some of which have better consumer protection standards than those the FDA provides for Americans.

As illustrated in Chapter 9, prescription drugs from pharmacies in countries like Canada cost about half the price of the same identical name-brand drugs in the United States.

(5) Protect Bankrupt Families from 200-500 Percent Medical Bills
When the United States was founded in 1776, one of the founding principles was that a person in economic trouble should be able to file bankruptcy and start over—bankruptcy protection was incorporated by our founding fathers into the original U.S. Constitution. On April 20, 2005, a new bankruptcy code was signed into law that, sadly, prevents millions of American families from being able discharge their debts and start over. Two very important exemptions were left out of this new bankruptcy code—you should contact your congressmen and senators to amend their legislation as follows:

Medical expenses. When families are forced to pay medical expenses after filing bankruptcy, the amount they pay should be reduced to the “usual and customary” amount of medical services actually consumed, not the two to five times inflated amount that the hospital never really expects most people to pay (e.g., the $3,010 figure in the Cleveland Clinic example versus the exorbitant $14,367 fake “retail” price).

Credit card balances. By the time a family files for bankruptcy, $4,000 worth of actual purchases has often turned into a $10,000 credit card balance, including 24 percent interest, penalties, and late fees. Similar to passing through medical expenses, the now-bankrupt family should be held responsible only for the actual $4,000 amount they spent, not the $6,000 in bank profit. If this law is not amended, banks will be issuing credit to millions more people not capable of handling credit—gambling that one day the bank will get its $6,000 in profit even if the cardholder files for bankruptcy.

No one wins, especially children, when a family is forced to seek federal bankruptcy protection to maintain basic food, clothing and shelter. Forcing these families to then pay off 200-500 percent inflated medical bills is cruel and unusual punishment for some of our nation's least fortunate citizens.

(6) End Federal Lifetime Health Benefits for Congressmen, Senators, and Government Officials
The primary reason that we need the first five changes is because, when it comes to health insurance, we have created an elite class of a certain type of animal straight out of George Orwell's Animal Farm. Make the following pledge now if you would like to ensure that all Americans, and not just those savvy enough to read this book, can one day get affordable health insurance:

I pledge not to vote for any politician unless he or she refuses to accept government-provided health insurance. Instead, all elected and appointed government employees should receive a defined contribution allowance and be forced to purchase health insurance on their own from an insurance carrier in their home state.

Regardless of whether these six suggestions are enacted, the revolution from employer-sponsored health insurance toward individual opportunity and responsibility is well under way. Decades from now we will look back at the period from 1945 to 2005 as the Dark Ages for U.S. health insurance, and 2006 as the beginning of the New Health Insurance Revolution.

In the 1980s, when I was a lecturer at Moscow University in the former USSR, I was embarrassed when questions were asked of me about U.S. health insurance—this embarrassment led me to testify before Congress about the problems with employer-sponsored healthcare. Today I am no longer embarrassed—I am gushing with American patriotic pride in our free enterprise system.

In writing this book, each week I sat down to write about the problems of a different aspect of U.S. health insurance—from long-term disability to getting affordable coverage for a sick child. And each week I found that some enterprising entrepreneur, corporate health benefits executive, or dedicated government official had already focused on the problems I was writing about and had created a solution.

The main problem is that because the solutions are so new, most people don't yet know about them. My goal with this book is to let America know about these new solutions. I hope this book helps you find health insurance solutions that will save money for your future medical expenses and better protect your family.

New Health Insurance Solutions for individuals, families, self-employeds, and businesses.

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