The essay is by James Capretta. He says that there are four keys to health care reform.
First, the basic market orientation of this approach is in a sense its overarching characteristic…allow providers on the ground to try new ways to deliver quality care at a low cost
When during the question period I said that RtG sounded tentative and timid, without strong specifics, the moderator rebuked me, saying that I needed to read the sections on health care and education. But, honestly, I did not see anything specific in Capretta’s chapter that indicates a policy change that would contribute to the worthy objective given above.
His second idea is to
place an upper limit on the amount of employer-paid premiums that would enjoy tax-preferred status.
That is fine, although I thought that at one point some sort of penalty for “Cadillac health plans” was part of Obamacare. Of course, if it ever was part of Obamacare, it probably got waived.
Anyway, Capretta also proposes an age-graduated tax credit to people without employer-provided health insurance. So without being especially charitable, I can say that he is specific on his point two. However, I have to quibble and say that while such a tax credit may be good on horizontal equity grounds–putting different categories of consumers on the same footing–it tends to worsen the overall bias that consists of subsidizing health insurance through the tax code.
His third idea is continuous-coverage protection. The idea as I understand it is to outlaw making risk adjustments to anyone who already has insurance coverage. If you never had coverage and you walk in to an insurance company with a bad illness, too bad for you. But if you were covered before, you have to be given rates that do not penalize your bad illness. That strikes me as a reasonable approach, although I still think we will need high-risk insurance pools. There are going to be people who choose not to insure and then find out that they have an expensive illness, and we are not going to bankrupt them.
His fourth idea is to enable Medicaid recipients to take a cash-equivalent voucher to purchase health insurance. Again, that is a reasonable idea. But as he points out, we need to sort out the state-Federal mix in Medicaid, which right now creates perverse incentives for states to over-spend Federal money.
With SNEP, I am thinking in terms of integrating all means-tested programs, including Medicaid. There is another piece in RtG, by Scott Winship, which alludes to the Oren Cass Flex Fund. But Capretta’s Medicaid ideas and the Flex Fund are an example of two specifics in RtG that strike me as not fitting together.
So, of Capretta’s four keys, the first has no specifics (no reforms of the supply side of medical care), the second involves a new tax credit that may or may not be a net improvement, the third seems fine to me, and the fourth strikes me as incompatible with other specific proposals in the book.
It is weird that this is such a problem considering there is always a standard of care, never a treatment without a diagnosis, and all diagnostics are regulated.
It makes me wonder if what we should reimburse doctors for is case study reports or something. Patient came in with these complaints, diagnostics performed were these, symptoms were these, treatment was this, outcome was thus, etc.
Regarding continuous-coverage protection, why can’t insurers offer Term or Whole-life policies like they do for life insurance? Or is that permitted and they just opt not to offer such policies?
The problem is that most people’s insurance companies change too often because the current tax code biases who chooses the insurance toward the employer rather than the insured. That makes gaps in their insurance and reduces the incentive for insurance companies to make long term plans with their customers.
Virtually all that’s wrong with continuous coverage can be laid at the feet of the tax code.
Fun fact: More than half of Americans are not insured by an insurance company at all, but rather by their employer. The insurance company is just there because it has a comparative advantage over the employer in managing insurance, in negotiating with medical providers, and in saying “no” to employees. But the money being paid out is the employer’s.
First, the basic market orientation of this approach is in a sense its overarching characteristic…
What nonsense. “Basic market orientation” is explicitly missing from both these proposals and from ACA. That is the primary defect.
Consider …
1.) Given a $17,000B U.S. economy,
2.) Given approximately 18% of the economy currently is “health care”,
3.) Given ACA provides for 20% of private insurance premiums to be retained by the insurance companies as “administrative costs” (ostensibly, administrative costs and profit),
4.) An estimated 50% of all actual health care delivery costs are paid by private insurance (the balance by Medicare, Medicaid, VA, etc.) …
A bit of quick arithmetic illustrates the U.S. citizenry is paying a bit over $300 Billion each year just for in private insurance company “administrative costs”.
That’s $1,000 per year in private insurance company “administrative costs” for every man, woman and child in the United States. That does NOT include the “administrative costs” of Government systems – Medicare, Medicaid, VA, etc. – nor the “administrative costs” of Government monitoring of private insurance providers, nor does it include the “administrative costs” of the health care providers themselves.
“Market oriented” systems suppress “administrative costs”, they do not MULTIPLY them.
The U.S. is a wealthy country. I’m not at all convinced it is wealthy enough to pay for actual health care PLUS over $1,000B per year in byzantine, and multiplicative, layers of “administrative costs” – all built upon and dependent upon the complete absence of “market orientation”.
The current U.S. tax code allows full tax deductibility for actual provided health care costs, for every constituent of the heath care industry (insurance companies, employers, health care providers) – except the people actually receiving the health care. Where is the “conservative”, and market oriented, recommendation to allow full tax deductibility for the people who are actually receiving, and paying for actual, delivered health care services/treatments????
I propose the following U.S. tax code changes (again) …
a.) Remove the tax deductibility for health insurance premiums paid by employers,
b.) Add full (100%) tax deduction for individuals – for actual health care expenses paid/incurred during the tax year. That would apply to either actual health care expense outlays by individuals, and/or health care insurance premiums paid by individuals. And the deduction is recorded at the bottom of page 1 of the 1040, under “Adjustments to Gross Income”, so it applies to every taxpayer, not just those who itemize.
c.) Allow the individual tax deduction – for actual delivered health care costs (NOT insurance premiums) – to be transferable to any other taxable entity. This feature allows and incentivizes anyone – family members, relatives, friends, or even complete strangers and business – to voluntarily contribute to and offset the costs of actual delivered health care for any other individual – in exchange for the tax deduction.
I suggest those tax code modifications are “conservative” AND will bring “market orientation” back into the U.S. health care system.