Wednesday, February 17, 2010

A Proposal for Bipartisan Health Care Reform

President Obama will be meeting with Republicans and Democrats from Congress next week in a Health Care Summit to discuss a bipartisan compromise on health care reform. This summit became necessary for health care reform after Massachusetts voters selected Republican Scott Brown to represent them in the Senate. Brown promised to vote “no” on the Democrat’s health care plan, leaving the Democrats one vote shy of the 60 needed to break a Republican filibuster. The parties, however, have vastly different ideas on health care reform, so is a bipartisan bill even a possibility? I think it is. Both parties have said they are willing to compromise. So, as long as each side is willing to give the other side something it wants (if you aren’t willing to do that, you’re not really compromising, are you?), a solution can be reached.

First, let us take a look at the problems with health care today, and what each party would like as part of a health care reform package.

Health Care Problems
There two main problems facing health care in the US today.

First, there are too many people without adequate health care because they are uninsured. Some claim there are 47 million uninsured, but, when you exclude non-citizens, those who can afford it but don’t buy it, those who are temporarily uninsured, and those eligible for Medicaid but haven’t applied, the actual number is somewhere between 15 and 27 million, which is still a lot who go without insurance. The wealthiest nation in the world should be able to provide coverage for everyone.

Second, health care is too expensive and the costs keep rising. There are many reasons for this, but one of the main drivers of cost increases are third party payments. Third party payments increase costs because they remove competition from the health care marketplace. When the consumer is paying, they shop around for the best service at the best price. If someone else is paying, however, there is no incentive to shop around. You go to the best available provider regardless of price. The three main third party payers in the US are employer provided health insurance, Medicare, and Medicaid.

Reform Ideas from Democrats and Republicans
Democrats are mostly focused on the first problem. They would like universal coverage and to prevent insurers from denying someone coverage or dropping someone’s coverage.

Republicans are mostly focused on the second problem. They would like to see increased competition by abolishing the tax incentive for employer sponsored health care and allowing individuals to buy insurance across state lines.

A Bipartisan Compromise?
What would allow Democrats to achieve some of what they want and Republicans to achieve some of what they want? Here is my proposal:

The tax deduction for employer provided health insurance totals about $250 billion per year. The cost of Medicare, Medicaid, and SCHIP is about $750 billion per year. If we did away with all three of these, the federal government would have an extra $1 trillion. With that $1 trillion, we could give a $3,300 voucher to every person in the US to buy their own health insurance. This means that a family of four would get $13,200, which, conveniently, is about what the average employer provided health insurance plan costs. Also, as part of this plan, everyone would be required to buy health insurance (hopefully Republicans wouldn’t object if a voucher is provided to buy the plan) and be allowed to buy from any provider regardless of which state their headquarters are in, insurers wouldn’t be allowed to deny coverage or drop coverage, and insurers would have to provide at least one plan that only costs as much as the voucher and would, at a minimum, provide for catastrophic coverage.

This plan would tackle both of our main health care problems. It would provide coverage of the uninsured, and it would bring down costs. Democrats would get some of what they want—universal coverage and more regulation of the insurance industry. Republicans would get some of what they want—more competition among private insurers and less government run programs. Insurance companies wouldn’t like the greater regulation, but they would gain a lot of new customers. A trade-off they would be hard pressed to pass up, I would think.

The plan itself isn't actually that original.  In some European nations, such as Switzerland and the Netherlands, all insurance if provided by private companies with the government paying for basic insurance for everyone.  (Shhhh!  Don't tell Republicans, they're opposed to "European socialized medicine".)

An additional benefit to this plan is that states would no longer have to pay some of the costs of Medicare, Medicaid, and SCHIP. This would help a great deal with their currently strained budgets.

One of the criticisms I anticipate is that this plan would do nothing about the disparities in care. The wealthy in the US get much better care than the poor. The critics would be right, it doesn’t deal with that problem, but every plan doesn’t have to solve every problem. Isn’t solving two problems enough? To my critics I would add, in the words of Barack Obama, don’t let the perfect become the enemy of the good.

As always, your feedback, comments, suggestions, and yes, criticisms are welcome. Please leave them in the comment section below.