The big question nobody seems to be asking on healthcare is this: What exactly are the reasons why we feel we need employers to be the primary channel of access to health insurance? Is it because we think we need them to cover a large measure of the cost? They don’t. They never have and they never will. Oh sure, they pay much of the premiums, but they could as easily pay that same money out to their employees, who would then buy their own coverage. Either way, it’s all just part of what they pay employees for their services. See this piece by Thomas McClanahan.
Here’s what we should do. Please read this carefully, and explain to me why it would not be better than anything else being considered.
Universal access/universal coverage – First, we provide access to coverage to each and every person in the country legally. The insurance is provided by for-profit insurance companies, who compete for your business. We do not allow the government to both set the rules AND be a provider of either care or insurance. By government mandate, no one able to pay is turned down or to has their preexisting conditions excluded. Everyone either buys the insurance or pays a tax penalty or fine for failing to do so. By allowing everyone to deal directly with an insurance company, coverage would be completely portable. Employers would not be required – indeed they would not even be allowed to arrange coverage for their employees under group plans. We ensure they don’t by taxing the premiums they pay for employer-provided plans as dividends, so they’re taxable to both the employer and the employee. There will be outrage from the people covered for free by gold-plated executive plans, but we just do it. We do allow employers to bonus the premium money or count it as salary, which means they deduct it, and the employee receives it as ordinary taxable income. But nobody is turned down, and everyone has to pay for coverage.
Regulation overhaul – Next, we have to scrap the system of state regulation of insurance and its byzantine patchwork of regulations, and have federal regulation only. With a system of federal regulation, we conduct hearings to determine what the plan design features should be, then every company has to offer those plan designs exclusively, or be taxed out of the business. Universal regulation means nobody has to move or stay where they are due to health insurance. A move to federal regulation would have to take place over a number of years, and until complete, there will be differences from state to state, but we cope with them as best we can.
Cost Control – We have to give people two kinds of financial incentives. First, the plans would cost them more for more comprehensive forms of coverage. They would actually start to care about things like whether to cover routine doctor visits, or medicines. Second, the plan designs must provide the patient (or parent in the case of a child) with financial incentives to make decisions that provide reasonable care at a reasonable cost. Some of these choices will be tough to make, both by the patient and the insurance company. Both should have a financial incentive to think twice before allowing any and all treatment expenditures. Every person should have to decide whether to buy a comprehensive pay-everything plan at a very high cost, or a more modest plan that only covers the catastrophic situations.
We absolutely must give up the notion that health care should always be free at the time of service, and that we should never have to decide whether to take the cost of a particular treatment protocol into consideration before deciding which treat option to use. There are though choices in life, and it’s highly likely that at some point, we all will have to make some, either for ourselves or for a loved one. What we WANT is the right to make those decisions ourselves, rather than having them made by someone else, regardless of whether it’s insurance bureaucrats or government bureaucrats. End of life decisions would make everyone put their money where their ideology is. Do you want aunt Tillie to live an extra six months? Fine, but you may have to decimate her finances (or yours ) to make that possible. The often emotionally charged decisions families have to make at the end of a loved one’s life are always difficult. They are made more so by having to make morally sound decisions on care that are also cost-effective. But by attempting to shelter people from having to make these difficult cost-control decisions, we have abandoned all hope of controlling the cost of care.
Lifestyle – Next, we require people to start making healthier lifestyle choices. Want to smoke? It’ll cost ya. Hate getting checkups? Fine, skip ’em but pay a penalty surcharge. Hate working out? Fine, but fail a body fat ratio test and pay a surcharge. Again, there will be outrage, but over time, many people will start to get healthier. Want to get serious about wellness? The insurance companies may want to give you a discount if you enroll in a wellness program. Under the current system of employer-provided plans, no such incentives are possible, because the employers are the ones who would reap all of the financial rewards, not the employees. We could also start a dialogue about other lifestyle choices, like free-climbing, or poisonous snake handling, or skiing in wilderness areas where avalanches are a real possibility.
Next, we never, ever pay for cosmetic surgery unless it’s to correct damage done in an accident or by disease, or a significant birth defect. But as with all of the things that are covered, we have to be rational. We also look long and hard at abortion – not whether is is moral or should be legal, but “Who pays?” If the law of the land says plans must cover abortion, that means you and I do. Is that what you want? Not me! And make no mistake, right now, we are!
Medicare – Retirees and those within say ten years from retirement should have the assurance that their benefits will not be reduced. Everyone else should be transitioned into the same plan options as pre-retirees. Plans such as Medicare Advantage plans (which President Obama wants to eliminate) should be continued without taxpayer subsidy.
Coverage for those who can’t pay – This is where probably the biggest challenge comes in, and I am not knowledgeable enough of the issues to feel strongly about the specifics, but there are a few principles I think we should incorporate. Obviously the taxpayer will foot the bill here, but we need to ask how we pay and we need to be assured that doing it that way is the best option. We need to give poor people different kinds of cost-control incentives.
President Obama wants the government to set the rules AND provide the benefits AND control the costs. He wants these things because he never met a government he wouldn’t prefer to a private sector program hands down. What I think makes the most sense her though, is a plan with ruled set by the government, but run as a public-private partnership. Innovation and hard work are behaviors that flourish when people are incentivized to innovate and work hard. It’s hard to do those things – to provide those incentives – within a government infrastructure.
You no doubt have opinions on this. If so, go ahead and post. You don’t need to register.