Thursday, September 3, 2009

Health Care: My Proposal

Here is my proposal for a health care plan. I should admit at the outset that I'm borrowing/stealing some of these ideas from others, and I also realize that I know too little of how health care and health insurance work, but here is my plan:

  • Make a government health care plan available to anyone who has been denied private insurance for any reason or to people who cannot pay their private insurer's premiums or deductibles or co-payments. (In other words, the private insurer would have the right of first refusal.)
  • The government plan's coverage of any one person will be retroactive to the date coverage was denied by the private insurer and or the date that the insured person determined that he or she could not pay the premiums. The private insurer, when it denies coverage, will have to pay the first month's premium for the government plan for the person who is denied coverage. The private insurer must also pay the first month of the plan for any of its insured's who make the determination that he or she cannot pay the premiums.
  • Tort reform such as that suggested by Charles Krauthammer in this article.
  • The private insurer will have to cover everything that is covered by the government plan (in other words, because someone cannot have the government plan and a private plan at the same time, the private plan will have to at least cover what the government plan covers). But the private insurer may do the following:
  1. Cut off treatment, provided it pay the insured's first month premium as he/she goes on the public plan.
  2. Insure additional treatments that aren't covered by the government plan.
  • The government plan will be administered independently, with administrators appointed for a set number of years. The administrators will set premiums, deductibles and co-payments (for short, I'll say "premiums") and be statutorily required to make a 1% profit. They will be required to make this profit only by the premiums they set and not by denying service.
  • People who cannot meet the government's premiums must provide proof of income stating that the premiums, etc., would exceed 10% (or whatever) of income.
  • The plan will make it legal for private insurers to enter interstate competition.
  • The plan will be funded by the following:
  1. An increase in the income tax
  2. A special tax on employer provided health care
  3. The premiums set by the independent administrators.
  4. The first two taxes would be meant as reserve funds to cover any unexpected shortages. The third is meant to pay for the bulk of the government plan.
  • The government plan at least (and at first) will cover emergency care, catastrophic care and terminal illnesses and a select other number of treatments. (For example, hospital stays for women who give birth.)
  • For the type of care covered by the government plan, health care providers will be forbidden from asking what, if any insurance, the patient has. For example, the health care provider will have to operate under the assumption that the patient is covered under emergency care. If after the fact it is evident that the patient had no insurance, he or she will be required to buy insurance within a month (or get insurance with affidavits that disclose proof of income), or be charged by the IRS for reimbursement of the premiums the government would have received.
  • To discourage "free riding"--i.e., waiting until one is sick before buying insurance--people with insurance will be able to deduct the amount they spend on insurance from their income taxes. The deduction will be possible on all of the tax forms, not just the 1040, but also the 1040A and 1040EZ.

There are a lot of potential problems with this plan:
  • The income affidavits might be onerous.
  • The premiums are likely to be high.
  • I haven't yet figured out how this plan would cover homeless people or undocumented immigrants. For some people, this isn't a problem, but I would like to see everyone covered.
  • Some of the requirements, such as the proof of income requirement, and the IRS charges against patients endanger individual liberty.
  • The program as I propose it would at first probably offer only coverage for the "un-insurable" and for those treatments that are most expensive. It would probably not cover individual visits for physicals or mammograms or other very necessary care.
  • I'm sure words like "catastrophic" and "emergency" care have meanings in the insurance world of which I'm unaware. So, I hope I'm not using these terms incorrectly.

The virtues of my plan:
  • It provides incentives to combat the free rider problems, and most of these incentives are "carrots" and not "sticks." In other words, it's not a "mandate" in the way that term is commonly (though perhaps not legally) understood.
  • It would free up the market for non-catastrophic, non-emergency health care, and, I hope, make such care cheaper to afford while at the same time making it possible for private insurers to earn profits.
  • While it would not necessarily guarantee that undocumented workers or homeless people get coverage, it would hopefully make it easier for them to do so.
  • It would divorce health coverage from employment.
  • It goes a little way, at least, to lessen the fear that going to a doctor might saddle someone with a diagnosis for a fatal pre-existing condition without any hope of being able to pay for treatment.
  • The government premiums would be functionally a "progressive" tax.
  • It avoids the cumbersome joint state and federal administration that we have with medicare and medicaid, but yet does not appear to violate principles of federalism, at least given the legal precedents that are currently in effect. (I would argue that the government plan is more like the "bank of the US" that the Court upheld in 1819 than it is like the "socialistic" Social Security Act that the Court upheld more than 100 years later. In other words, from a constitutional perspective, it's less extreme than commonly accepted programs. This won't please constitutional purists, but it will go a long way toward living up to a 21st-century jurisprudence.)
  • It is politically doable:
  1. It gives less traction to the charge that the public plan is simply "single payer lite," a backdoors way to introduce Canadian-style single payer system. (I'm not saying that this system is bad, but it would probably not get the necessary support.)
  2. It incorporates some Republicans' (notably John McCain's) ideas on tort reforms and taxing employer benefits.
  3. It's a baby-step. It covers a little but might be expanded.
  4. It pays for itself.
  5. It divorces costs from services, although it offers only a limited number of services, at least at first.
  6. It avoids hot-button issues such as payments for abortions and stipulates that only those procedures approved by congressional enactment will be covered.
  7. it would probably stand up to Court challenges.
I haven't read any of the actual bills under consideration, so I cannot comment to what extent my "plan" approximates those under discussion. But it has the virtue of modesty and doability, and it would at least cover the most pressing cases, which might be all we can ask for at this stage of the game.

UPDATE 9-4-09: Thanks to those who commented. Three comments is the most I've ever gotten on this monument to my vanity blog, and these are from complete strangers. Things are looking up for Pierre Corneille!

It appears that the "Corneille plan" is 1 for 3 in the voting, but David Schwartz voted twice (and the one "pro" vote was the one I cast for myself). Still, I appreciate the comments, and David Schwartz does have some very interesting objections that probably need to be addressed and that I only partially addressed in the comments.

8 comments:

David Schwartz said...

Your plan has a near-fatal flaw. As public policy choices screw up the public plan by adding ridiculous services like prayer therapy and acupuncture, private policies must also cover those services. So private policies will not be able to compete with the public plan (by offering a rational, market-driven combination of services rather than a politically-chosen one).

timnuccio said...

Your plan is a disaster, because there is no way that we can pay for it.

It's like you're living in a world of limitless resources to read this.

David Schwartz said...

Interestingly, your plan also has the opposite of the flaw I pointed out. (Amazing that you were able to get both these flaws in one system!)

By making all health care premiums tax deductible, health care plans will include *everything* they possibly can. Heck, health care plans will fix your roof because roofing repairmen can't get paid tax free.

So the government will ultimately have to set prevent private plans from offering many services they would like to supply, because otherwise it will be a giant tax loophole.

So the government will have to force private plans to cover every crazy thing the political process makes the public option cover and they'll have to prevent private plans from covering too much of what the public plan doesn't cover.

So what's the purpose of the private plans exactly?

If health care is needed, why let private plans opt out of providing it? And if it's not needed, why let people buy it tax free?

Sorry, your proposal makes even less sense than I first thought.

And why put a special tax on employer-provided health care but tax exempt privately-purchased health care? How is that rational?

theolderepublicke said...

David Schwartz:

You raise some good points, especially about the slippery slope (as I interpret it) of tax-exempting health care expenses. On the one hand, everything would risk being a health care expense in order for people to get a tax deduction. Alternately, the government would have to step in and micromanage.

I wonder how to solve the problem? I'm not sure at any rate.

Per your question about letting private plans opt out: one way I tried to compensate for this would be that they'd have to pay the first month of the dis-insured person's government premium. Perhaps this wouldn't be enough? Or perhaps too onerous?

In answer to your first objection--the "near fatal flaw"--good point, too. How about simply requiring that all private insurers provide catastrophic, emergency and terminally ill care (whatever that all means, and it shows, I guess!), and if the government adds more to its coverage (say, prayer therapy or healing through the use of magic crystals) the private insurers would not have to cover that?

My ultimate goal is to ensure that everyone has easy access to the bare minimum of health coverage in a way that won't bankrupt them and in a way that functions better--more efficiently and more cheaply--than the emergency room.

Thanks, I should say, for taking the time to read and critique my (apparently much needed to be critiqued) plan.

theolderepublicke said...

timnuccio:

Well, you're right, we live in a world of scarcity. But that's the problem, isn't it? If we lived in a world of limitless resources, the health care debate wouldn't be on the radar.

In fact, there'd be no death, no countries, no wars and no religion, too.

Imagine!

Anonymous said...

Great discussion.

-The President-

David Schwartz said...

Thanks for your thoughtful replies to my criticisms. With the fixes you've suggested, your plan is no worse than most of the other suggestions out there.

The big problems are in implementation as the plan relies on the political process "calibrating" a large number of parameters it is (sadly) unlikely to get right.

These include:

1) What does the public plan cover?

2) What must private plans cover?

3) Can private plans just skim the very healthiest people and take them out of the pool for the public plan? How will the public plan be fiscally sound with the wealthy and healthy opting out of it?

4) What private healthy expenses will be tax exempt and what won't?

But, in fairness, this is a problem with all the proposals on the table, certainly including the President's.

theolderepublicke said...

David Schwartz:

Thanks for your further comments. It feels good to be upgraded from "fatally flawed" to "no worse than the others" If that's not progress, I don't know what is! :)

Your points are very well taken, and I'll have to consider them. Fortunately, since I'm neither a legislator nor an adviser to legislators, I don't have to worry about anyone adopting my mistakes soon.

I'm also inclined to believe that the all star line up of delegates who "represent" me in Congress--one of whom I didn't vote for (Rep. Danny Davis), one of whom I voted for but will probably not vote for again (Sen. Durbin), and one of whom I didn't have a choice to vote for (Sen. Burris)--have already made up their minds.