Saturday, July 11, 2009

A Simple (But Controversial) Health Care Solution 

I propose a simple plan to ensure that everyone can obtain health insurance coverage without bankrupting the country:

First, level the playing field between individual insurance and employer-provided insurance by either taxing both or giving the same deduction or exemption for both. The choice of how to obtain coverage should be tax-neutral.

Second, encourage competition by allowing people to buy their health insurance from any insurer, across state lines. Insurers may offer first-dollar coverage, various levels of deductibles and catastrophic coverage at appropriate premium levels. Require all insurers to describe their plans in plain English with special attention given to costs and coverage, and establish reasonable nationwide minimum standards for various levels of coverage. Coverage of pre-existing conditions would be mandatory, but with either premium adjustments or caps on payments. Permit people to purchase catastrophic coverage and pay their own way for everyday treatments, if they so desire, at a substantial premium discount, reflecting the reduced risk borne by the insurer. This coverage could be either their primary coverage or purchased as umbrella coverage.

Third, make it easy and economically beneficial to establish health savings accounts/flexible spending accounts for all persons, whether individual or employed.

Fourth, permit small businesses to form cooperatives for the purpose of buying group health insurance.

Fifth, establish a means-tested (with stringent income and net worth limits) voucher system (like food stamps) that poor people can use to pay for health insurance coverage that they otherwise could not afford, and maybe for pre-existing condition premiums for certain high-expense conditions. The people receiving the vouchers would have the same freedom of choice of insurers that anyone paying out of their own pocket would have. Insurers would be required to accept the vouchers in lieu of cash premium payments. Illegal immigrants would be ineligible for this subsidy--if they were eligible it would constitute yet another encouragement for illegal immigration, and that problem is big enough as it is.

Sixth, (and here's the controversial part) permit (but don't require) any health service provider to refuse to treat anyone who does not either (a) have insurance coverage or alternatively, (b) provide evidence of personal ability to pay that the provider is willing to accept. Providers could take pro bono cases if they chose (e.g., illegal immigrants), but would not be allowed to adjust their prices to spread the cost to insured persons; i.e., charity would be funded out of the providers' own pockets, or from charitable donations by others. States and local governments and charitable organizations could, if they so desired, establish clinics and hospitals to provide services to those who refuse to act in their own interest, but with the voucher system there shouldn't be too many of those people.

Since there would be no excuse for not obtaining coverage or otherwise (e.g., being wealthy) being able to pay for services, people who choose to gamble with their lives by failing to obtain appropriate coverage would probably pay dearly. Too bad, but that would be the natural consequence of their choice. This might strike some as inhumane, but people choose to risk life and limb all the time--riding motorcycles, sky diving, scuba diving, base jumping, mountain climbing, etc. Part of being free is to be able to choose how to pursue one's own happiness, but in my view society has no obligation to protect people from the consequences of their own personal choices. Free-riding should not be tolerated, much less encouraged.

The idea here is (a) to make it easy, both administratively and economically, for everyone to obtain insurance coverage, (b) for the public to subsidize coverage for the truly needy, and (c) to encourage, through competition, efficiencies in both insurance coverage and in providing care. Perhaps most importantly, this plan would (if the means test weren't allowed by Congress to become so lax as to be essentially meaningless) minimize government outlays and avoid government rationing of health care services as occurs in the UK and Canada.

I'm neither an economist nor a medical professional, so I'm sure that there are dozens if not hundreds of ways to poke holes in this plan. But I think people generally will act in their own self-interest, and I would be willing to bet that under this plan the number of uninsured would be cut approximately in half, with the remaining uninsured comprising the independently wealthy or the incorrigibly stupid.


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