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USAA NOT DMV: SECURING UNIVERSAL COVERAGE THROUGH THE NOT FOR PROFIT SECTOR

After attending the Health Care Day of Service Organizing Meetings‏ a few weeks ago, I begin to think we are at an impasse, as we were in 1994.  Single-payor has passionate supporters, but many voters and many elected officials are almost as passionately opposed.  Republicans propose fresh ideas for reform, that are, however, most likely unworkable.

There may be a workable compromise, however, in the model used by an organization called USAA that provides auto insurance for active and retired military personnel.  The USAA model, rather than the DMV model, may be preferable to a majority of Americans.

In his recent book,The Age of the Unthinkable, Joshua Cooper Ramo, a former member of Kissinger and Associates, stated that a move to a single payor health care system might improve resiliency in a world where biological warfare could be a threat.  Instead, avoiding this type of centralization and the development of a system of health care coverage based neither around any level of the government nor private employment might be optimal.

On Saturday, April 11th, a correspondent on Forbes on Fox argued that it would make sense for employers to get out of the pension and employee welfare benefit business.  Mr. Forbes indicated that it would make sense to move to a system where employees owned their benefits.  This is similar to Sen. McCain’s idea that an individual market in Health Insurance should be encouraged, by taxing employer-based plans.  Our ability to transition the current system to the one envisioned by Sen. McCain and Mr. Forbes appears constrained.

Republican pundits, such as Newt Gingrich, are absolutely right when they say that market forces would lower prices.  However, despite things like Web-MD that make people more informed consumers of their own care, these are very complex “buying decisions,” that make effective “comparison shopping”  (if you aren’t a clinician) more difficult.  Additionally, the costs that exist, even with the price reductions that would come with a more price-sensitive patient base, would still require an insurance model to be feasible.

However, Sen (CAPT, USN [Ret.]) McCain was probably carrying the answer to this conundrum in his pocket during the 2008 Campaign.  Like most active duty and retired military officers, Sen. McCain’s auto insurance is likely carried through USAA, a self-insured, inter-insurance exchange (established under Texas insurance law) that covers military personnel which is able to use its large number of members’ buying power to get favorable rates from auto insurance carriers.

What if health insurance came, not from the government or employers, but from membership in large, not-for-profit membership organizations, such as: Unions; professional organizations (e.g., ABA, AMA, MGMA, etc.) or charitable, fraternal and religious organizations (e.g., VFW, AOH, KoC, American Legion)?

This is similar to the system that exists in the Federal Republic of Germany and the currently proposed solution for auto industry retirees.  It is similar to how the health insurance plans of some of the motion picture industries, like the Screen Writers Guild, operate today, an industry that pioneered a structure where almost everyone is an independent contractor working on projects.  Such a system would enable these organizations to negotiate with carriers for lower rates, using the market power of a large number of covered lives, as businesses like GE have done since the 1980s.  It would leverage the unique characteristics of the US Not-for-Profit sector is a way suggested by the late, great management thinker Peter Drucker.

Such a structure would meet the Obama Administration’s Goals of:

1)  Reducing Cost;
2)  Guaranteeing Choice; and
3)  Ensuring All Americans Have Quality, Affordable Health Care.

As mentioned above, these organizations could leverage their membership numbers into discounts from payors, just as payors in a Preferred Provider Organization (“PPO”) model use their patient census to obtain discounts from physicians and institutional providers.  These entities would negotiate with existing payors, as employers do today.  They would, however, do this as their primary function, with an undivided loyalty to their members as a group. As with more innovative companies today, such as GE, there would be both the skill and the awareness to manage quality, as well as cost, for their members’ health care dollar.  Given that membership numbers would be important to obtaining discounts, there would be an incentive to give more (likely all) people access to care.

These entities would be funded by their members’ tax deductible membership fees.  Their employers could also make tax deductible contributions to those entities that provide health care to their employees.  The Government could also contribute a to these entities to the extent that they reduce the requirement for Federal programs like Child Health Plus and Federal-State programs like Medicaid.  These organizations would use these funds to defray their less affluent members dues and co-pays, as Not-for-Profits like the YMCA do today.

Such a system would rely neither on government nor on employers, but would create a new, parallel system of Not-for Profit organizations that manage benefits and leverage the buying power of a large number of participants.  It would be responsive to its members in a way that a centralized, Federal program could not be.  If successful, this system could be applied to pensions and Social Security.

The emergence of such a system would create resiliency by creating a functioning social structure that could escape any (not very likely, but still remotely conceivable) potential social or economic collapse.  It is worth noting that a Not-for-Profit religious and charitable organization took over the government pension system and the banking system successfully after the collapse of the Somali central government in 1991.

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