Natural Governance A New And Better America

Natural Governance Components

Universal Basic Income (UBI)

There are many approaches to UBI, many of which would be preferable to not having it at all. To get started, here is one approach.

The federal government shall pay each eligible citizen of the United States a tax-free weekly payment from collections of one or more specified consumption taxes or specific savings from the elimination of federal government programs. The payment shall be termed a “Universal Basic Income Payment, or UBI Payment.” To be eligible, the citizen must have been a citizen of the United States (and also not a citizen of any other country) for at least 17 years and have been physically in the United States for a cumulative total of 17 years, all of which shall be subsequent to the most recent absence of 180 days or longer, except that active duty military or other government service, or overseas employment by a U.S corporation, shall not count as physical absence for this purpose.

Recipients must physically be in the United States or its territories or similar entities whose residents pay the full amount of U.S. taxes, with the payment amount reduced pro-rata for days of absence. This payment should be irrespective of earnings or other means testing, but may be preempted (meaning redirected to other individuals or government agencies) under certain conditions. If a citizen is adjudicated not capable of self-care or caring for children, or is sent to prison, all or a portion of the UBI payment shall be redirected to the government agency providing subsistence or care. If the citizen is a non-custodial parent, the UBI payment shall be shared between the custodial parent(s) and the citizen.

UBI should start small, and be phased in over many years. It should ultimately be equal to the federal poverty level so that there will be no mass poverty. There will be individual special cases, which should be the purview of state and local government, not the federal government. When UBI is fully phased in, federal welfare payments, federally subsidized medical insurance, and unemployment compensation will all be eliminated. During the phase-in period, these payments and subsidized housing rents shall be adjusted to prevent a windfall to the recipients of existing subsidies.

National Registry

As with UBI, there are many approaches to creating a national registry, but here is a start.

The federal government should maintain a computerized registry listing all persons physically in the United States or its territories or possessions. For each person, the registry should include certain basic information, all of which should be factual and extracted or extractable from public records. This information should minimally include whether or not the person is a citizen and dates of any changes in citizenship or immigration status, outlaw or “wanted” status, and dates and places of all border crossings to or from the United States and its possessions.

The National Registry might usefully include a wide range of other information such as status of driving or aircraft piloting privileges. A discrete alphanumeric identification number should be assigned. Personal identification data including a digitized photograph and other identifying information, possibly including DNA characteristics, should be included. Categories of information should be expressly limited to those established by federal legislation, and access should be strictly controlled. Individuals, after proper identification, should have access to all information in their own record (except possibly certain security information, the existence of which and not the actual content would be disclosed) and the right to seek correction of information deemed erroneous. Certain information, such as medical history and marriage status, would be maintained only with the individual’s permission and would be accessible only with the individual’s permission; even then, it would be accessible only to approved requestors such as medical providers.

Medical Provider Cost Control and Federal Government Payments

Establishing effective controls and procedures is more feasible than one might expect, because the federal government already has enormous lists of procedures and services with approved prices for each. Such lists are now the basis for payments to doctors and other providers of services to patients on Medicare and Medicaid. Other providers include pharmacies, ambulances, prosthetic manufacturers, and vendors.

As always, the best way to control prices is via free enterprise. However, there are some difficulties with medical goods and services, because consumers (patients) often do not know what they will require, and pricing is so complicated that it must be simplified to permit meaningful competition. Moreover, services are often provided on an emergency basis, and the patient typically has no choice of providers. Natural governance addresses these issues.

As a first step, each provider would have to decide whether to participate in the federal program or to opt out. Those that elect to opt out are free to charge whatever they wish, and their relationship with patients would be whatever the parties agree. Federal, state, or local government can still establish and enforce standards of care and sanitation but cannot affect pricing. Each provider would have the right to opt out at its sole discretion.

Providers that elect to participate, which will probably be most or almost all providers, will be subject to these guidelines:

  1. Providers may charge what they wish, but each unit price must be a stated percentage of the price approved by the federal government for that service. The percentage must be (a) prominently disclosed and (b) reported to the government. Initially, most providers will likely charge 100 percent of the federal price, because that is what they are paid now for Medicare patients. At present, most providers seem satisfied with that payment schedule. Participating providers are now required to accept the specified government payment and can only charge the deductible to the patient or gap insurance company. Under natural governance, that limitation would be removed. Providers in wealthy areas, those who have more patients than they are willing to service, or those whom the public perceives as more desirable than others for any reason might charge more than 100 percent. Those who wish to attract more patients could charge less than 100 percent. Whatever the percentage, it would be freely elected by the provider, subject to reasonable advance notice and required time periods between rate changes. The same percentage would apply to all consumers; medical insurance companies, large employers, other organizations, or buyers’ co-ops would not be free to negotiate special pricing. Prices offered by each provider would be available to all on an equal basis, including to non-citizens.
  2. For all citizens of any age, the federal government would pay a stated percentage of its approved rate for various services to each provider based on auditable billing submitted by the provider. The democratic process and market forces should determine the amount, but as an example, natural governance proposes paying 60 percent of the first $50,000 incurred each year and 90 percent of all over without limit. The payment would not be affected by the pricing percentage charged by the provider, be it lower or higher than 100 percent, except that it would never be more than a stated percentage of the provider charge, say 90 percent. By way of example, assume an approved charge of $100 and a federal share of 60 percent of the approved charge, subject to a maximum of 90 percent of the provider charge. Providers charging 125 percent of the approved charge (or $125) would receive $60 from the government; they would look to a combination of the patient, the employer, any state and local funding, public charities, and any medical insurer for the remaining $65. Providers charging 100 percent of the federal approved rate would receive the same $60 from the government and would look to others for the remaining $40. Providers charging 50 percent of the government rate ($50) would receive $45 from the government (90 percent of $50) and look to others for $5. The federal payments would apply regardless of whether the patient had medical insurance or employer coverage.
  3. The approved federal rates should be reevaluated periodically, and the adjustment procedure would take the prevailing provider charges into consideration. If, for any procedure, the prevailing charges were less than 100 percent, the allowable charge would decrease; conversely, if the prevailing rates were over 100 percent, the charge would increase. Providers would be allowed to modify their percentage charges to apply to the new rates. At present, providers almost universally submit enormous bills and then accept whatever Medicare or the respective insurers allow. If the rates are too low, patients may have a hard time obtaining quality care because providers will lack incentive to excel. If rates are too high, they will stay that way, because there is no incentive for a provider to charge less than the government or insurers will pay.
  4. Although the number of medical line item prices is enormous, each provider would normally only provide a much smaller number of line items. After providers get used to the system, it is probable that the majority in some fields would charge more than 100 percent, and those in others would charge less. Over time, the approved charges would accurately reflect the prices charged by a preponderance of providers.
  5. The portion of medical costs not paid by the federal government would be paid by a combination of (a) patients’ own funds from UBI or any other sources, (b) personally obtained medical insurance with no portion of its premiums paid by the federal government, (c) public charities, (d) any available state or local funding, and (e) amounts paid by those employers that elect to provide coverage, either directly or through group coverage. Individual hardship cases should be the responsibility of state and local governments, with no participation by the federal government. Providers (except in the case of life and death emergencies) could either require payment at time of service or could extend credit, at their discretion. This system would facilitate the rebirth of a traditional doctor–patient relationship, with many doctors extending soft credit or partial forgiveness to the needy and possibly even accepting payment in kind. The government payment would soften the impact of fee forgiveness or deferral. The system would also ease the burden on emergency rooms, which currently cannot turn any emergency case away or require payment at time of service and thus experience enormous quantities of bad debts. Passing these debt costs to others creates a whole different set of problems. With natural governance, emergency rooms would at least get the government share of the payment.
  6. The medical insurance industry would be regulated to ensure financial responsibility, as is now the case, and to verify compliance with its own insurance contracts. However, companies would be free to set whatever prices they wish, varying rates with sex, age, and expected medical expenses. Competition, not government mandates, would control prices. Insurance payments for claims would generally be a function of the treatment or other service rather than the price the provider charges. In other words, medical insurance would become more like classic insurance, where the insurer assesses the statistical risk, adds an amount for overhead and profit, and sets rates accordingly. If it charges too much, its sales volume suffers; if too little, it loses money through excessive claims. The direct payments made by the federal government would lower the cost, because insurance would only cover the gap between federal payments and cost. The federal heavy lifting would also lessen the need to vary rates to reflect individual risk, though it would not eliminate it. In most cases, unlike the current ACA environment, people would have an incentive to purchase coverage while they are healthy, because if their health deteriorates, insurance would likely be more expensive or even unavailable. With traditional insurance, one cannot buy a policy after one’s home catches fire. Likewise, with health insurance, a person would not be able to purchase coverage for cancer treatment after the illness was diagnosed. This would reduce or eliminate the adverse selection aspect of the ACA, which is given as the justification for forcing healthy people to buy insurance they do not want.1 As a selling point, policies could address the right of the insured to remain covered if expensive new needs arise. Presumably, insurance claim payments would be less than the total excess cost over the federal direct payment, which would give the insured an incentive to minimize costs, but that would be entirely left to the discretion of the insurer. Notably, medical insurance companies should not be free to negotiate preferential rates with providers, but they would be perfectly free to help their policyholders find the most effective approach to treatment and the most economical selection of providers. In fact, they would be encouraged to do so, and that service would be a valuable selling point for the insurer’s sales department. The patients would have the right to select their treatment approach and to choose their own providers, but deviating from the insurer’s recommendation would, in most cases, not result in increasing (or reducing) the company’s payment obligation. This, however, should be resolved between the parties rather than being the subject of government regulation.
  7. Controlling pharmaceutical prices is a real conundrum, and for most part is beyond the purview of natural governance. Prices must be high enough to give companies an incentive to develop new products. If a product saves lives, its value—at least to a patient—is infinite; however, that does not justify an infinite price. It is reasonable and proper for pharmaceutical companies, like other corporations, to seek to earn a profit. However, some price limitations must apply. As a partial solution, natural governance would require that pharmaceutical firms not charge domestic purchasers higher prices than those they charge to others. As an example, the Canadian government sets prices for pharmaceuticals. Those prices are far above the direct cost of production but often less than the price the drug company would establish, given the need to recover its cost of development plus a share of the development costs for products that never got approved but nevertheless incurred costs, plus profit. Pharmaceuticals regularly sell to Canadians at Canadian government prices, which are lower than the prices charged to U.S. purchasers. If the company seeks, reasonably, to achieve a certain revenue objective, it must charge a higher price to domestic purchasers than would otherwise be the case. A common requirement that one purchaser not pay a higher price than another is known as a Most Favored Customer clause. The federal government could quite reasonably establish such a clause for any sales to purchasers receiving any government payment, which in the medical industry would be just about everyone.

1 For more discussion on adverse selection, see the following section, Analysis of the ACA.

Subsidized Housing

The federal government should purchase or prepay all first mortgages on Section 8 housing if the interest exceeds the federal borrowing rate. It should then eliminate debt service and reduce housing assistance payments (HAPs) by the amount saved. Housing choice vouchers should be phased out over a short number of years. In apartments where the tenant pays utilities, utility allowances should be phased out. For apartments with utilities provided, rent should be increased by the reasonable value of utilities. When individual UBI reaches the federal poverty level (that is, it meets the poverty level for a household of two, divided by two), rents should increase to at least the operating costs of the property without financial expenses. As UBI is phased in, rents should be increased proportionately. There should be no new construction of subsidized housing, as older housing declining in value can fulfill that need more efficiently. If the federal government does subsidize new construction of subsidized units, which it should not, it should pay the cost with federal appropriations and not rely on tax credits or other tax stratagems to pay or hide part of the cost.

Alien Visitation

The term “Alien Visitor” would include immigrant students, guest workers, recreational tourists, and medical tourists. Visitors would not have state their intention in advance, and could change their intention at any time. Thus, a student could decide to get a job, and actually get one, without reporting the change in intention.

Any immigrant without flags on his or her national registry file would be free to enter the United States as a visitor at any time. Procedures to establish flags would be created by national laws enacted pursuant to the Constitution, with legal review and all other safeguards in place. They could be specific to the person, such as a criminal record or outstanding judgment; or they could be generic, such as country of origin, sex, or age range. The effect of any particular flag could range from a minor additional level of inspection to an outright prohibition against entry. First-time visitors would have to provide 30 days’ notice of their intention, but if the government did not create a flag during that period, permission to enter would be automatic.

Visitors and citizens alike would have to cross borders at designated checkpoints. Any undocumented or unreported crossing (in either direction) would be cause for permanent denial of right to enter and/or criminal prosecution.

All non-citizens would be required to provide their own health insurance and to fund the education of any school-age children present during the school year. Obtaining health insurance would ensure that immigrant visitors would not become a medical expense to U.S. citizens, but insurers would have no obligation to insure those with high-cost medical conditions. Their decision to insure, and the price charged, should be strictly between the insurer and the insured. Neither an inability to obtain insurance because of high-cost medical conditions nor family ties to U.S. citizens would excuse potential visitors from compliance with these requirements. Immigrants who are physically within the United States but who fail to comply should be deported.

Citizenship should not be granted automatically upon birth within borders of the United States. It should be limited to people born of a mother who was a U.S. citizen at the time she gave birth, whether or not she was in the United States at the time. This would require an amendment to the Constitution, but in the meantime, pregnant women could be prohibited from entering or required to leave the United States.

At the discretion of the president and Congress, Alien Visitors could be required to leave after a certain period of time and remain outside the country for another specified period. For example, they might have to leave after a year and remain outside the United States for six months before returning. Alternatively, they could be required to leave after any period not exceeding a year and remain outside for a length of time equal to at least half the time they were physically present in the United States. Natural governance makes no recommendation as to any requirement for maximum stays or lengths of absence after a visit.

Alien visitation and citizenship should be on an entirely separate track and have nothing to do with each other. No amount of time spent in the United States as a guest visitor should entitle a person to a preferential path to citizenship. That said, a person’s wrongful actions as an Alien Visitor could serve as a basis for denial of a citizenship application. After a reasonable time to cure, any person’s undocumented presence in the United States should be a permanent and irrevocable bar to citizenship.