Headlines such as “Ageing Boomers to cost us nearly $1.8 b” (CT Sat 22nd) are misleading and incorrect.  The headline should say, “Older People may spend more on health care”.

The headline arise from antiquated accounting practises – not the likely cost of future health care.  Our current health accounting procedures, used by Health and Treasury planners, assumes we have to save money for our future health care before we need the care.

Rather than trying to save an unknown amount of money for health care we can use “just in time” financing.  When an old person (or a young person) needs medical help then they can get an interest free loan that they pay back from their future income when they are well again. If the person dies the loans are paid back from their estate.  We can control the amount of funds by giving everyone – depending on age and health – a yearly accumulating amount of health credits.

Infrastructure can be built before the facilities are needed by people buying priority access with some of health credits.

Doing things this way removes the need for most health insurance. People can still take it out for queue jumping if they wish.  Governments do not have to collect taxes up front to build infrastructure and importantly we do not have to pay the rent seekers unnecessary interest.

2 thoughts on “Funding Health Care

  1. Interesting thought Kevin, however, as many thousands of “elderly” are living in Government housing there is no “estate” to pilfer from, besides, if a married person dies are you suggesting the remaining partner has to foot the bill for any major operation that ended in death anyway?….If I have misunderstood in some way, please correct me, but I reckon the cost of operations under such a scheme will encourage many surgeons to jack-up the costs immediately and you may as well bring back the “paupers prison”.


  2. Ronald,

    Loans are repaid when the person can afford to repay the loans. As the loans are interest free it really doesn’t matter how long it takes to repay the loans so, for example, if a surviving partner cannot afford to repay then the debt will wait until they die and then if it is not paid it will be written off.

    Costs go up when people have no choice. With loans you have a choice and you will pick the surgeon who is cheaper because you still have to repay the loan.

    Insurance and universal health care is expensive because individuals do not care how much it costs because they believe they are entitled to it because of the insurance and they will not pick the cheapest but the most expensive. That is why insurance normally does not cover all the costs.

    Medicredit will probably result in a halving of medical costs compared to medisave because the system will become more efficient and we will stop such nonsense of having to go to an MD to get a prescription or a flu injection.


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