Hola muchachos! It’s your hombre-in-chief Angry New Mexican again, serving as your editor du jour since my angry hermanos are still hangin’ out in the backyard… smoking the peyote or something. Anyway, I saw a really interesting article by David Goldhill on health care reform. After a few emails where we trolled each other repeatedly, Angry Overeducated Catholic had the most cogent response. Without further ado, here it is…
Angry Overeducated Catholic
I realize it’s been a few days, but having gone back and read the Atlantic article Angry New Mexican started this with again, in depth, I just wanted to commend it to everyone. It’s a really great article, and it puts to rest some red herrings in this debate:
- Uncontrolled costs are not due to rapacious insurance companies, evil drug companies, corrupt doctors, greedy lawyers, wasteful patients, or any other bad actor…or rather they are due to all of them because it’s the perverse incentives in the system itself that are to blame.
- No government plan—not single-payer, not a public option, not an NHS—that continues to make comprehensive health insurance the primary payment method will succeed. Indeed things like a single-payer plan or NHS will likely make things worse because they’ll push costs even further from the consumer.
As ANM said, the author believes that only the scrapping of comprehensive health insurance for most folks will address our core problem…and raise other problems that other things must address. I basically agree.
I also agree with Angry Military Man that requiring Americans to purchase comprehensive insurance is unconstitutional. But I agree with ANM that everyone having comprehensive insurance is a good thing. In fact, given our compassionate decision to make treatment mandatory for crises, I consider it a basic infrastructure of our society.
So here’s my pitch:
- Every American, every man, woman, and child, gets a basic comprehensive insurance package from Uncle Sam: $1 million lifetime coverage, with a $100,000 lifetime deductible, and a yearly deductible set to 10% of your income from the last year.
No premiums. No yearly paperwork (on your part). No IRS employees going over your precious medical records, instead the IRS simply sends HHS your income summary each year. You will have to document that you’ve spent the deductible, but that shouldn’t be hard for catastrophic cases.
That’s $300+ trillion dollars potentially, but spread out over a whole population, and it’s not like private catastrophic insurance doesn’t also have to find the money to pay out… Now, 2,500,000 folks kick off each year, so as an upper bound, we’re looking at around $2.5 trillion a year, and I’m guessing it’s quite a bit less, thanks to violence, drugs, car accidents, etc. (Incidentally, the actual average for end-of-life care for the more expensive older patients (over 65) appeared to be about $51,500 (current dollars) in 1996…let’s assume that’s actually risen 10% year over year, so it’s basically doubled twice by now to around $200,000…assuming that all lifetime deductibles are met before the end of life period, and that the period lasts 2 years on average, that’s $400,000 per person, meaning our payout is much less than estimated above.)
Now, where does private insurance come in? Well, make it taxable, and let the market sort itself out. Want a lifetime deductible under $100,000? Need more than $1 million in lifetime coverage? Want smaller yearly deductibles? Want an HMO? Want comprehensive care? Whatever you want, fine, but no mandates, no subsidies, and no government interference (other than standard anti-fraud, etc.).
Want to bar existing conditions? Fine! Want to pay for 8 abortions/year per teenage girl? OK! Whatever, we don’t care because it’s no longer our business…
- Abolish Medicare. Halve Medicare deductions on pay and put the half remaining towards administering the catastrophic payouts. That’ll give us $100 billion or so per year, enough for full payouts for 100,000 citizens.
- Make HSAs, unlike insurance, fully tax deductible…so, really insurance is deductible, because—surprise—you’ll pay for it out of the HSA! But it’s no more deductible than any other medical expense. Hooray!
- The article’s remaining ideas are pretty good:
“For lower-income Americans who can’t fund all of their catastrophic premiums or minimum HSA contributions, the government should fill the gap—in some cases, providing all the funding. You don’t think we spend an absurd amount of money on health care? If we abolished Medicaid, we could spend the same money to make a roughly $3,000 HSA contribution and a $2,000 catastrophic-premium payment for 60 million Americans every year. That’s a $12,000 annual HSA plus catastrophic coverage for a low-income family of four. Do we really believe most of them wouldn’t be better off?
Some experts worry that requiring people to pay directly for routine care would cause some to put off regular checkups. So here’s a solution: the government could provide vouchers to all Americans for a free checkup every two years. If everyone participated, the annual cost would be about $30 billion—a small fraction of the government’s current spending on care.”
These are the fringe cases that account for so much of the emotional impact of the bogus “47 million uninsured” number. So, yes, just pony up and pay.
I’d be tempted to make that “one check-up every two years” instead “one check-up per year for kids up to 18 and adults over 35”, since most young adults are least vulnerable to the ill effects of missing doctor’s visits.
Illegal immigrants? They get treated as they do now, in the shadows…but only for crisis care. However, certainly low cost plans and insurance will arise to meet that market, or out of pocket costs will cover all but the worst illnesses. And, those who become legal and start filing taxes get roped in.
So the only question left: how far from revenue neutral is this approach?