HIRB’s Features and Benefits
HIRB permits a very wide range of health expenditures to be sustainably financed. Its key features include the following:
A ratable base including households, corporates, and governments. 2. It has the ability to absorb deferred health maintenance by patients who previously skipped treatments due to lack of access to health care services, many times due solely to costs.
It can substantially reduce the structural fragmentation in the “health care arena.”
It may be designed such that health-care benefit coverage would be free and independent of employment sponsorship.
The HIRB program may be applicable to either a single or multiple payer design.
There is no deficit financing. There is no mortgaging the future. There is no kicking the can down the road.
Even with continued health inflation, annual funding contributions may stay flat and level or may increase at a rate much less than the health inflation rate.
HIRB program has long-term sustainability.
There has been substantial review and due diligence with a variety of professionals, as previously stated.
We anticipate the operating expense ratio for the HIRB program to not exceed 1 percent of all liabilities.
The ability to meet substantive and compelling political, economic, and social policy objectives without simply mandating the existing broken dysfunctional health financing arena.
By design and operation, HIRB program cost less to fund than conventional methods for health financing.
From a budget planning perspective, the costs of funding and paying for health-care services has historically been treated as an annual operating expense. That approach is archaic and is something akin to borrowing for your home in a series of sequential high interest short-term loans, as opposed to consolidating them into a single medium interest long-term mortgage. Continuation of this approach will inevitably lead to (and already has led to) either much higher taxes or significant cuts in benefits—at a time when government faces enormous long-term fiscal challenges and families have experienced decades of stagnant incomes.
The adoption and implementation of the HIRB program will initiate a giant leap toward resolving, restructuring, and creating a state health financing system. It places in alignment the public policy goals of efficient and equitable allocation of resources and is the framework of new allocative and technically efficient streamlined health financing system called the HIRB program.
Frequently Asked Questions
Does HIRB program save money? Yes
Based on reasonably conservative parameters, the HIRB program can demonstrate significant real dollar savings (potentially very significant). Of equal importance is the fact that the HIRB program can meet major public policy goals, alleviation of public and private budgetary pressures without reducing recipients’ benefits and stemming the tide of increased health inflation costs on such budgets.
Does the HIRB program have any downside risk? No
If the health inflation rate exceeds that upon which the model is built, more money will need to be contributed into the funding mechanism. The issue is how program adjustments are allocated among the various parties. However, this is not any different than what would occur under any other financing arrangement facing escalating health-care costs.
Most people would consider having to expend more money toward their health care as not good. However ironic, in the HIRB program, the higher the contributions levels, the lower the total funding cost.
In contrast, if the actual health inflation rate is less than that assumed in the financing model, either contribution levels may be reduced or a surplus will accumulate within the funding mechanism. This may allow the existing contributions to remain flat and level for some or all of the parties or possibly even be decreased even with continued medical inflation.
What happens to the HIRB program when interest rates rise?
Interest rates and the prices of outstanding bonds move inversely.
Rising interest rates puts downward pressure on prices of bonds. Decreasing interest rates creates upward pressure on the price of bonds. Neither has any bearing on Bond Issuer. The movement of interest rates, either up or down, only affects the outstanding bondholders.
Relative to the new issuance of new bonds, higher interest rates means higher debt service payments. It also means higher earned interest. It also means the net gain may increase thereby reducing the cost of funding.