There is a Way to Avoid Paying for Other People’s Health Care – Interview

Published January 17, 2025

As health care spending soars (see page 20) and health insurers increasingly delay or deny claims (see pages 7, 17), consumers are retreating to indemnity-style insurance protection, which pays a cash benefit for adverse health events. Indemnity-style health insurance is a feature of Plan for America (PFA,) a voluntary private savings proposal designed to rescue Medicare and Social Security from insolvency, pay off national and state debt, reduce all taxes, and provide comprehensive health care with no exclusion for preexisting conditions.

PFA coauthor Terry Nager, a certified financial planner and founder and president of an investment advisory firm, talked with Health Care News about how the health care component of the plan works and why it may be the only way the United States can get around the Obamacare behemoth.

Health Care News: You have said one of the hallmarks of PFA is that it provides a $1 million lifetime comprehensive health insurance policy in a way that “nobody (i.e. the taxpayer) pays for someone else’s health care.” How would this work?

Nager: It is a classic indemnity-style plan. The insurance company is not making decisions on whether a claim is valid or not, as long as it is in the health care realm. The individual and the doctor would make the decision, and the company would pay the claim. But people are going to be careful about their claims because the lifetime cap is $1 million dollars. There is also a health savings account feature that incentivizes people to wisely spend their health care dollars.

Health Care News: Would participants have to purchase this plan each year, and how much would it cost?

Nager: The plan would cost $11,200 each year, and it is not mandatory. The cost is tax-deductible and includes a $1,200 health savings account which will cover the $1,200 co-pay and deductible for the plan. Participants can keep that amount and spend it as they wish if they don’t use it.

The co-pays and deductibles disincentivize utilization. Today, families are paying upwards of $20,000 or more before health coverage even kicks in. The PFA health coverage could be a lot cheaper and a lot less grief because there will be no claim haggling.

Health Care News: How would PFA accounts be funded?

Nager: People will fund their personal accounts with the 15.3 percent payroll tax equivalent (Social Security and Medicare) they would no longer have to pay to the government. That money will be invested in an index of U.S.-domiciled companies managed by a trust we call the For America Security Trust, or FAST, which will also grow, and that growth will be distributed to participants.

Health Care News: What would happen if a participant exceeded their one-million-dollar cap early in their participation in the plan? Could they leave PFA and go back to enrolling in Social Security, Medicare, Obamacare, or Medicaid?

Nager: There is no provision to do that because the PFA would be set up as a contract between the trust and the federal and state governments. PFA is voluntary, and I suppose someone could jump out of it to get coverage under Medicaid, but why would they do that? The benefits are so much better in the PFA health plan.

For example, Medicaid may not cover your long-term care, but the PFA plan covers that. And there could be other benefit limitations in government programs.

Health Care News: What if someone used up their $1 million-dollar cap? What would be their alternative to getting additional health care coverage?

Nager: Once they reach their cap, the account assets will be at risk. However, participants can take out an interest-free loan to cover their medical costs without a cap from the trust. Participants would pay off that loan with assets in their account over a period of time.

All loans would be backed up with a life insurance policy (price added to the loan) so the trust is always made whole in the event of death. The loans would be paid off slowly and steadily to allow the existing account assets to grow.

Health Care News: Even though the PFA would offer indemnity-style coverage, is it possible the insurers could engage in haggling or restrict networks or tell you where to go because prices are better?

Nager: No. That is the beauty of this. The individual has the power, not the institution, or the drug companies for that matter. In fact, all these parties will be required to publish their prices because people will need to know how their health care dollars are being spent, given their lifetime cap.

Health Care News: There are so many entrenched interests in health care. Do you think PFA could ever become a reality?

Nager: We have talked to a great many people about PFA, and few to no people find anything wrong with it. The only qualm is whether it can pass politically, due to the special interests.

We designed our plan with both Democrats and Republicans in mind. Democrats will like the idea of universal health coverage that doesn’t penalize people for preexisting conditions. Republicans would like the idea that the plan encourages responsible spending.

We would love to hear what Elon Musk and Vivek Ramaswamy have to say about it, because this is right in line with what they are doing with [the Department of Government Efficiency].

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