Straight Talk About Health Insurance, or How To Achieve Portability and Accessibility Without a Government Plan
Two of the health issues that we all seem to generally agree about are the desirability of portable insurance policies and facilitating access to affordable policies by everyone who wants to buy them. Both of those goals are achievable without a massive overhaul of the existing health care and insurance industries. There are more than a few ways to skin those cats, but let’s look at what is possible.
Obviously, this hasn’t happened before because most people get their health insurance at work, and each business bargains individually for the best appropriate and affordable deal it can get for its employees, whether the company pays some or all of the cost. When Earnest Employee moves to a new employer, he leaves his old job behind, including his old health insurance. This arrangement is a result of the tax benefit bestowed upon employers and employees alike by recognizing the employer’s share as a deductible business expense, and not taxing the benefit to the individual employee.
This can easily be changed, at least more easily and far cheaper than setting up a bureaucracy to generate and administer government insurance. Briefly
- Phase out health insurance deductions for employers. Caring employers could increase salaries in the amount of their reduced health insurance costs, less FICA and Medicare tax. Or just continue to allow business tax deductions for health insurance allowances paid directly to employees.
- Institute a “refundable” tax credit up to $X for health insurance expenses, medical and dental expenses, HMO memberships, and to fund Health Savings Accounts.
- Allow individuals to deduct from income similar medical costs in excess of the tax credit amount.
- Allow insurance companies to sell products covering all aspects of health care “across state lines.” This could still allow state insurance commissioners to regulate the policies to some extent, but thousands of policies would quickly become available for purchase by individuals.
- Require medical providers who accept any insurance to accept all insurance, but allow them to price as they desire. This would give insurers an incentive to negotiate lower prices with providers, as Blue Cross/Blue Shield does now. HMO’s should be allowed to charge their own members less than “outsiders.”
- Catastrophic care insurance must be allowed.
To a certain extent, this might shift some health insurance costs from employers to the federal and state governments. That would depend most directly upon how big the tax credit is, but if we want portability, it has to cost something. It would also cost far less than paying the salaries, business buildings, benefits and taxes and un-reimbursed expenses of a new bureaucracy and its employees. This approach is essentially what McCain suggested during his inept campaign. It is still a better idea than ZerOcare. It’s more complex than our current system, of course, but it facilitates portability.
If the portability plan is implemented, accessibility for all is a quick side benefit. The same plans available to Earnest Employee will be available to Ulysses Unemployed. He can take his tax credit and buy health insurance and/or medical care, or fund a Health Savings Account, just as Ernie can. (Some legislation might be needed to specify a way for the unemployed to pay their premiums before they receive their refund, but it could work like food stamps or FEMA payments, perhaps.)
Cost containment and affordability are harder nuts to crack, but with the individual controlling his own medical encounters and choosing his own insurance provider, there will be the true competition that ZerOcare only fantasizes about.
Coverage of pre-existing conditions? With all the subsidies this plan would give to the individual to buy health insurance, there should be nobody who isn’t permanently covered (after a phase-in period, subsidized by us, the taxpayers). In fact, the one coverage it might make sense for the government to provide could be “pre-existing conditions” coverage. Again, not an insurmountable obstacle.
Finally, nobody could deliver on the promises that The One made tonight. We shouldn’t even try.