Tuesday, June 16, 2009

1+1+1 = 1.8

There is the substance of health care reform, and there is the politics of it. David Brooks ably addresses the latter in today's column in the New York Times. Even with a single party in power in Washington, it has become clear to all that the President cannot deliver on his promised "access-choice-lower cost" trio. So now the aim will be to claim political victory with a bit less expanded coverage, cuts in Medicare payments to providers and minor tax increases, while also using accountable care organizations to reduce choice. At the bill signing, Mr. Obama will assure us that we have obtained the full three-part package, even if the total is less than the sum of its parts. It will be years before the full implications are understood.

Along those lines, for those concerned about the long run, beware the modified public plan option that uses the benefits of government ownership and the federal supremacy clause to underprice private insurers, in part by avoiding the costs and regulations of state jurisdiction. This taxpayer-supported plan will, in time, become dominant. It will start by drawing off two categories of people: Low-risk, young healthy people who will be required to have insurance but who will want a lower-cost plan; and higher cost, less healthy people who will be happy to join the new public company at rates lower than they can obtain from private firms. The actuarial facts of life of the latter group will force the government to give greater and greater subsidies and preferential treatment to the new GM, which will in turn make it ever more attractive to a growing base of the population. Instead of this plan, as I have mentioned, why not use the approach of the Netherlands to ensure access?

1 comment:

Farmer Bob said...

We do not need a single payer system. We need a single premium system. There should be no difference among policies; there should be only one standard for care, and that is universal care. Allowing insurance companies to nibble away using risk groups is counter-productive.

I would prefer the government define a universal premium based on the real cost of necessary treatments and diagnosis, and provide a tax deduction equal to that premium for every person.

Additionally, the government could collect the premiums and distribute them to the insurance providers via the IRS. The citizens could enroll with whatever provider they wish, but enrollment is mandatory.

Then we can dismantle Medicare and Medicaid, and use the money for the premiums of those who don't pay taxes equivalent to their deductions.

Competition is preserved. Choice is preserved. The government is out of the healthcare price fising business.

Let's get out of the box, people.