Donald K. Allen for President

Top of the Week

Monday, January 14, 2008

After reading a story in our newspaper about how hard it is for small business owners to offer their employees health insurance, my wife asked me how I was going to fix this. The cost of health insurance is supposed to go up 30 percent this year. Well, Dear, here’s how.

The Insurance Research Council found that insurance fraud adds about $250 a year to a typical household’s home and auto insurance premiums. For all insurance, The Coalition Against Insurance Fraud says it costs each person $875 a year. Other sources believe that insurance fraud constitutes a $100-billion-a-year problem. The U.S. Government Accountability Office (GAO) found that one out of every seven dollars spent on Medicare is lost to fraud and abuse. In 1998 alone, Medicare lost nearly $12 billion to fraudulent or unnecessary claims.

Step one in combating this problem is to institute a national policy of: ‘loser pays,’ which simply means that if you sue someone and you lose the suit, you pay your attorney fees, the court fees, AND the defendant’s legal fees. This alone will give insurance companies and individuals a level playing field to counter false and frivolous claims and win. The way our system is today, which is how Congress has chosen to keep it, nearly all claims are settled out of court because it is less expensive in the long run than challenging them in court. The claimant and their attorneys basically have nothing to lose by suing.. With loser pays, they have everything to lose, just like the defendant.

Step two is to institute tort reform (another thing Congress has debated for more than 20 years) and cap damage claims that have gotten absurdly out of hand. Insurance companies don’t lose this money when huge claims are paid. They pass that loss on to you and everyone else that insures with them. That is one of the major reasons for insurance premiums going up and up. Another is the high cost of performing every test imaginable by the health provider to prevent possible lawsuits down the road if some obscure, rare, unlikely problem is overlooked. Go to the doctor with a headache and you will be getting an MRI, CAT scan, spinal tap, blood culture, X-rays, and a major blood chemistry profile. Just in case. John Edwards’ court battles against corporations won his clients huge awards and, in turn, led to higher prices for all the rest of us.

What we need today is catastrophic health insurance to cover major problems, not the common ingrown toenail or tracheobronchitis. Today, however, children are rushed to the doctor with a runny nose. Why? Because the family’s or government insurance will pay for it. Adults run to the emergency room to get one stitch in a cut that would have healed quite well (and sometimes better) with Band-Aids®. This is not abuse of our healthcare system, but it certainly is overuse of it, which contributes significantly to overall costs. Teaching children throughout K-12 basic first aid and self-care will greatly decrease this tendency to run to the doctor in the future.

Now, Honey, here’s the biggest solution. The Fair Tax Bill. By signing this bill, our country’s economy will experience the greatest, most wide-ranging improvement in history. No more income tax! You and I will be taking home all that money we earned that formerly was taken from us to be squandered by Washington. Washington will still get a revenue through the National Sales Tax (NST), but YOU will have control over how much you spend and how you spend it. I believe without the ‘prebate’ clause, the NST will be 18%, which will apply only to new products and will not apply to food or medicine. Corporations will not have to pay income tax, either, and the money they keep can then be applied to health insurance for workers, research and development, company expansion and improvement, and new construction. Google the words ‘embedded taxes’ and see how overall prices of goods will come DOWN somewhere in the 15-20% range, too. What have we got to lose? If it doesn’t work out we can always go back to the severely broken, punitive system we now have. While you’re at the computer, learn more about The Fair Tax, too.

So why haven’t these changes already been made? Congress. Most of whom are lawyers, why would they want to harm their fellows’ businesses just to help the typical American through tort reform and loser pays? If they pass The Fair Tax Bill they might have less control over our incomes. So remember when you go to the polls this November. How can you expect different results when you keep doing the same thing over and over again? Don’t expect real change by voting Republican or Democrat again and again. Vote independent!