ROOPA: Responsibility of One’s Own Products & Actions
50% of Taxes & Insurance Spent on Life Style
Up to 50% of our taxes and insurance premiums already go to cover ‘lifestyle’ activities. Lifestyle also offers a far more accurate predictor of our future health care needs and social service requirements.
Lifestyle Based Health Care Plans
Our Proposal:
Designate up to 50% of our taxes and insurance premiums based upon our own lifestyle preferences. This will prove more cost effective than today’s other health care options. This finally replaces gov’t and insurance companies from making these budgeting choices in our name (wherein the controversies, corruption and mismanagement all lie).
The program itself is referred to as ROOPA: Responsibility for One’s Own Products & Actions. This is presented in our book, titled: Social Cost: The Magic Bullet to Health Care Reform. We offer a 4 page summary below. (In Attachment)
Excerpt:
“The ‘social cost’ of obesity averages around $150 billion a year. This comes to about 10 cents per item (of junk food). Every soda pop, hamburger and candy bar will now have this 10 cent premium. (Based upon number of calories)
The more soda you drink, the more you have already paid into your own health coverage for obesity. The extra cost serves as a small deterrent, but more importantly, it’s so much more affordable than covering its medical cost after your sick (or even paying the insurance premiums necessary to fully cover it). This dime affords you free health care for all obesity related treatments. It’s the most affordable ‘pay as you go’ insurance plan. It cost a dime.”
Part I:
The Problem – It’s a Crap Shot
Shopping for the ‘Best Plan’ is a Crap Shot
Compare ROOPA’s lifestyle approach to today’s other reforms efforts. Creating a health care program that covers all people, for all ailments, is proving too expensive. The alternative is not much better. Suggesting we ‘shop for the best plan’ is to ask us to guess every illness we and our loved ones will ever have in the decades to come. It’s a crap shot.
Many people simply make the wrong bet so we end up with all the nightmares of HMO’s. Most of today’s reforms are still working from this same health care model. The efficiency-savings being offered by today’s reforms are not really big enough to make this model truly affordable. This is due to having the wrong working model rather than over-reaching in our goal for universal healthcare.
There is another option: We pay according to our own lifestyle preferences and consumption. The advantage is that this is both more affordable and people are happy to pay for things they enjoy doing rather than things they don’t need or use.
Part II:
Solution: Pricing Social Costs
Demo 1: Obesity
10 Cents Per Soda Covers All Obesity Related Care
Obesity and smoking offer some great examples. The ‘social cost’ of obesity averages around $150 billion a year. This comes to about 10 cents per item (of junk food). Every soda pop, hamburger and candy bar will now have this 10 cent premium. (Pricing likely based upon number of calories).
The more soda you drink, the more you have already paid into your own health coverage for obesity. The extra cost serves as a small deterrent, but more importantly, it’s so much more affordable than covering this medical cost after your sick (or even paying the insurance premiums necessary to fully cover it). The dime affords you free health care for all your obesity related treatments. It’s the most affordable ‘pay as you go’ insurance plan. It only costs 10 cents.
Taxes vs Insurance: Market Based vs. DC
This 10 cents is not a ‘new tax.’ It’s much different than Democrat’s (suggested) 4 cent tax on’ junk food.’ Taxes are set by Washington and so generally fail to price the actual social cost accurately. They either charge too much (cigarettes) or too little (junk food). Even worse, adjusting either of these imbalances is nearly impossible to do in Washington. In contrast, insurance premiums rise and fall according to related social cost of a specific product or activity. So as companies find new ways to reduce obesity, the premiums will fall right alongside it: a tax refund.
Insurance: Market Based Social Cost
Auto insurance provides the working model. You drive, you pay auto insurance. You don’t drive, no auto premiums. You get 3 speeding tickets, you pay higher premiums. No tickets, lower premium. A more expensive car, by a younger driver, has a higher premium. A less expensive car, by an older driver, has a much lower premium. Auto insurance is a market based approach to a lifestyles social cost. It prices-in all the different risks and savings of our habits & choices and passes them on to the user – without gov’t tempering.
Budget Lock Box
Another big advantage: gov’t can raid these funds. If the local, state and federal gov’t all go bankrupt today, drivers still have all their benefits. Their auto insurance funds are not raided by gov’t no matter the ‘emergency.’ Insurance is a lockbox against government ‘discretion’ (extortion). Contrast this against all of today’s program cuts to school budgets, health care services, infrastructure development, etc. As gov’t budgets collapse, so do each of these programs. The lack of budgetary independence is destroying them. ROOPA finances these programs by simply allowing the users to fund these things directly. They will be free of gov’t siphoning and politics and the roller coster of the economic times.
Part III:
$4 Trillion in Savings
Demo 2: Smoking
Current Tobacco Policy: Over Charged, Underfunded
In the case of tobacco, cigarette taxes can run double that of smoking related social cost. ($9.25 per pack in NY vs. the $5 in social cost.) Tobacco taxes are used for everything from Hawaii’s ‘Rainy Day Fund’ and public transport, to Cali. children’s health care and Special Education programs. And yet, little actually ever goes to treating smoker’s related health care.
Smokers are instead charged an additional premium on their health insurance but not enough to cover their medical cost. This leaves service providers cannibalizing resources from other healthcare programs to treat smokers. This degrades health care for these other programs as well as for smokers. This is the downfall of budget sharing. This leaves state and employee programs covering for smoking related illness. It’s a huge burden to these programs and so taxes and premiums are further raised to cover it.
It would be more cost effective to simply use smokers ‘taxes’ to cover their own health care. Let the gov’t cover these other state programs from their general tax revenue. It’s the same price difference but cleaner budgeting.
ROOPA: Better Service for 50% Less
ROOPA’s Proposal:
Tobacco generates up to a $100 billion a year in tax revenue and insurance premiums. This should be dedicated to smoker’s health care – EXCLUSIVELY. This would create a $1 trillion dollar industry over the next decade. The buying power would yield incredible savings while the massive market potential would attract a flood of new technologies, services, medicines and research for the next generation of efficiencies. A 5% annual reduction would reduce cost by 50% within the next decade. As these costs drop, so will tobacco’s taxes. These incentives will redirect the tobacco industry towards reducing the social cost of smoking instead of seeking loop holes to gov’t regulation.
We will also have this industry juggernaut squaring-off against insurance and pharmaceutical companies rather than leaving negotiations to gov’t (lobby-prone congress).
Coverage would include ALL smokers, not just the healthy ones. The sickest will find coverage based upon the nature of their ailments rather than today’s system for cherry-picking only the healthiest members and leaving the rest to the public dole. We once again have free health care for all smoking related illnesses like we did for obesity related care (in the example above). You smoke once (or a thousand times), your covered.
This approach allows us ‘free’ healthcare for a range of ailments from smoking and obesity, to AIDS or drug and alcohol abuse. People can now go about their own lifestyle prerogatives knowing their tax and insurance premiums go directly for their own care. Meanwhile, the rest of us are spared these costs. Gov’t no longer decides how much is spent on these programs, nor can they siphon off ‘extra’ funds.
Smoking & Obesity: $4 Trillion in Savings
The combined social cost for smoking and obesity comes to a startling $350 billion a year in health care obligations. ROOPA can now remove this financial burden from both gov’t budgets and insurance payouts. This alone would reduce our general premiums by an impressive 10%. We will have removed nearly $4 trillion worth of claims from our tax and health insurance premiums over the next decade. This is before adding in all the savings from the new found program efficiencies.
Initial estimates suggest we can reduce today’s tax and insurance burden by as much as 50% once we have included other lifestyle activities. This has culminated into the Republican’s ‘Flat Tax’ wherein taxes and insurance premiums have been reduced by half, but this is now followed with the Democrats ‘Vice Tax’ which makes up the budgetary short fall otherwise needed for all these lifestyle extras. It’s the best of both worlds combined into one.
Social Cost: The Magic Bullet to Health Care Reform
These are some of the issues covered in our ROOPA book: Social Cost: The Magic Bullet to Health Care Reform. The stats were provided by Guerrilla Economics who also helped to develop the concepts. Honored to have your thoughts on all this. If you like the general concept here, happy to provide you a more formal presentation or answer any questions.
Yours Sincerely,
Raghu
Letter to Ed Case (after I sent the above summary)
Full ViewRe: Health Care Reform II; Survey/Your Thoughts?
From: Raghu John View Contact
To: Ed Case
I thought your latest report on health care was great. Thank you.
Part I seemed more a position paper instead of the nuts and bolts of an actual proposal. PART II was a simple and yet comprehensive overview of our health care options. A little more detail on your own mix of these different plans would have been great.
I’ve been waiting for this kind of overview from the media. Maybe it’s time you started making your own multi-media presentations. You have a knack for summarizing issues that is fresh and informative. Multi-media is supposed to be relatively simple now a days. It always make you look more savvy.
After reviewing your report, it seems our ROOPA program offers a range of advantages not included in these other health care alternatives – as explained in the example below. ROOPA’s biggest advantage maybe it’s approach that is both original and talks to issues unresolved in these other programs. This has the potential to capture the public discourse in a way the other talking heads have not. You may give ROOPA a closer look and see if it can offer these kinds of advantages to the campaign and discourse.
The example below offers another demo of its approach to the issue.
Whatever the case, thank you again for the quality of discourse, talent and passion you bring to the cause.
Raghu
* * * *
There’s 3 points that weigh on every plan of the health care debate:
Cost:
A) Reducing them;
B) Who pays;
C) Who decides which benefits or people are dropped.
(Every plan recognizes it’s simply too expensive to cover every ailment, for everyone, all the time).
So while all the other reforms can hope to help with the 1st issue: Reducing Costs, none have been able to resolve B & C: Who Pays and Who Decides?
These proposals also face the same handicap: grappling with the cost after the fact. Only preventative health care talks to the cost before it happens. This goes to ‘the ounce of prevention for a pound of cure.’
Tracking Lifestyle Costs & Savings.
The center piece of preventative care comes down to lifestyle. ROOPA provides the finest tool for tracking the issue by simply following its social cost. Follow the social cost of any given lifestyle or product and you can pin point the exact junctures of greatest liabilities. This highlights which areas will offer the greatest savings and so reducing cost as well as designating payers or defining benefits and people covered.
Alcohol: $200 Billion Annually
Alcohol offers a great example. The highest estimates places alcohols total social cost at around $200 billion a year. That comes to about 70 cents per can of beer. This covers all alcohol related medical cost such as cirrhosis of the liver, child abuse, etc.
Covers Cops, Docs & Jail
This 60 cents also pays the tab for the extra cops needed on the streets to police drunk drivers as well as the added jails to house offenders or required court time to deal with the violence, spousal abuse and host of other crimes.
15% in Auto & Health Insurance
Up to half of this tab is for medical costs. The other half is paid through auto premiums and taxes. This alcohol surcharge would allow us to reduce our medical cost by about 5%. This cost will be transferred over to those responsible: alcohol’s consumers. It would also reduce our taxes and auto premiums by about this amount. Combined, we may have up to 15% in savings off our taxes, auto premiums and health insurance.
50% Savings from Life Style
Our last letter showed how the social cost of smoking and obesity would reduce our health care premiums by up to 15% once it was transferred out from our health insurance bill and over to the retail price of cigarettes and junk food. In our example here, we see that alcohol would shave off another 5%. Combined, we are looking at a 20% reductions to our health insurance premiums (plus additional savings in our taxes and auto insurance). We have found 20% in savings from just these 3 lifestyle activities while still improving upon all their related social services.
Would a similar approach to all the other lifestyle social cost offer us another 30% in savings? Probably more. This would give us a 50% reduction in premiums – even before any cost efficiencies through the consolidation of these expenses.
45% Consumption by just 4% Users
And yet, this remains only half the story. Once you look closer, you see that 45% of all alcohol is consumed by just 4% of its users. These are the alcoholics. If we could help these 2 million alcoholics, we could save ourselves $90 billion a year.
Rehab: 80% in Savings
Let’s say an effective program would cost $15 billion. This $15 billion could save us $90 billion a year. That’s a savings of 80%. What other program offers to save us 80%? However, spending more money on these things seems counter intuitive. So today’s budget cuts are instead gutting rehab programs in the name of fiscal discipline. Democrats have a natural sense for this principle of ‘the ounce of prevention for a pound of cure.’ ROOPA demonstrates the point.
$30,000 Per Drunk Driver
This leaves us with a remaining $100 billion in alcohol related social cost. Of this, $65 billion is from drunk driving. That comes to a steep $30,000 per drunk driver.
20/80 Rule
Only $35 billion (of the entire $200 billion) comes from all other consumers of alcohol. Their actual tab is just 7 cents per can of beer. In short, it’s the old 20/80 rule. 20% of the users (alcoholics and drunk drivers) make up 80% of the cost of alcohol. How revealing.
ROOPA simply suggest that drunk drivers would now have 50% of their taxes and insurance premiums going to cover this $30,000 bill. This would allow the drunk driver to pay off their tab in 3 years paying little more then what they already pay in taxes and insurance.
Meanwhile, the family man can have 50% of his premiums going to cover his children while the young gay man can assign 50% of his premiums towards AIDS. The Catholic no longer has to subsidize AIDS and the Gay no longer has to subsidize the Catholic. In this way, each of us will now decide which programs are paid for, how much is paid and who is covered. It’s now no longer left to gov’t, insurance or special interest to decide but rather the people themselves.
That is why we call it economic democracy.
Raghu
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From: Ed Case To: ssriraghu@yahoo.com.
Sent: Saturday, July 11, 2009 3:08:01 PM
Subject: Health Care Reform II; Survey/Your Thoughts?
