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Specific Reforms Needed
Health reform is not so hard. First we must understand that there are two markets at work here. There is the market for actual health care. And then there is the market for health insurance. The market for health care needs to be more transparent. So encourage providers to get together and establish a standard list of a la carte services and procedures. Require that these prices be published and kept up to date. When a person/family member wants to arrange for healthcare, require providers to give an estimate for this care. Establish fairness in the law that would subject providers to excessive service, price gouging and under-estimating complaints. Let the trial lawyers do the rest. On drugs, open up distribution rights to all foreign sourced drugs. Allow exclusive rights only to patented drugs. Limit patent terms and allow one renewal only. Allow foreign prices to be used in drug price gouging actions.
The health insurance market was largely state regulated before the ACA. Let the states still regulate the insurer ratings/qualifications, claims and complaints in their states, however get them out of the policy term/coverage regulation business. Let the industry come up with a standard insurance form to be used nationwide. Let the insured select the coverage, deductibles and self insured limits from a standard, easy to understand menu for any policy. Policies would all be written as “major medical” policies with or without “routine and well-care.” Limit coverage to US risks. Let people buy special policies for out of country risks. Allow the insurers to provide discounts to those who belong to health maintenance or consierge care programs.
Other actions (which could be separate bills), limit torts for medical malpractice to actual damages with a top end limit. Exempt drug/device manufacturers, once products are FDA approved, from class actions. Limit damages to incidents of gross negligence.
Eliminate the “employer provided” insurance tax preference. Allow anyone to use pretax (income and withholding) dollars to buy immediate family medical insurance without limitation. Encourage other groups – union, fraternal, religious, academic, alumni, social – to get into the group insurance business. If they allow once a year open enrollment, allow them to participate in a high risk pool program.
Expand health savings accounts. Let contributions and interest be pretax and pre-withholding. Let insurers manage these accounts to tie into health insurance and provider payment.
Establish a national “high risk pool” reinsurance group. Use professional actuaries to establish what specific risks qualify as “high risk” and what assessment on each dollar of insurance sold needs to be paid into this fund on every policy written. Redistribute these funds to the insurers to cover a ratable portion of their underwriting losses from high risk policies.
The keys here are: we negotiate our own deals with health care providers. We buy our own insurance. We use pretax dollars for all health related expenses. We are treated fairly by providers. Those groups who provide insurance and allow open enrollment will have the benefit of reimbursement for underwriting losses on high risk policies.
Published in General
This is all extremely sane and reasonable. It’ll never happen.
Sure. What could possibly go wrong there? Government regulation to enforce “fairness” and trial lawyers. Oh, goody.
From your keyboard to committees pasting up the new bill(s), DK…
There’s a reason the GOP isn’t going to push these ideas: they’re bad ideas.
Let’s start with high-risk pools. High risk pools are an outgrowth of the idea of libertarians that the individual mandate is such a violation of freedom that even socialism is an improvement on it, but of course it has to be ineffective and limited socialism. The mandate to purchase insurance allows for less regulation in the health sector, but no, this is not enough for libertarians; no no, if the choice is between socialism and forced participation in a free market, well, we’re all socialists now!
The key to well-functioning health markets is a thriving reinsurance market, and that’s not really compatible with high-risk pools (which distort said reinsurance market).
Then there’s state-level regulation of health insurance, which strikes me as utterly ridiculous when “purchasing across state lines” (full federalization of health regulation) has been a GOP mantra for a long time.
Transform tax subsidies for healthcare into a simple deductible? George Bush spent, what, two trillion dollars in tax cuts for the middle-class and was still portrayed as “passing tax cuts for the rich.” This strikes me as quite a lot worse, in a country that has moved left since the early 2000s.
Tort reform? Oh yes, let’s give even more wealth to healthcare providers! That’s just another way of throwing money at the problem. [contd]
[contd]
“Establish fairness in the law that would subject providers to excessive service, price gouging and under-estimating” contradicts tort reform.
“Let the industry come up with a standard insurance form to be used nationwide” seems a bit non-free-market to me.
Anyway, the simple fact of the matter is you cannot have a free market in healthcare without either a) an individual mandate, or b) a German-style public option (which is where “high risk pools” would end up). I rather like option “a”.
I’ve really enjoyed your essays on health care Doug. If only the bustards would listen. They won’t listen though.
Didn’t just enough of us *elect* them, Doc? Are they beyond our efforts to *make* ’em listen?
These seem workable ideas from some of the social classes of America, but not for everybody. So far as I understand the difference between Mr. Trump & the GOP, your party is bravely cutting taxes, whereas your president wants to make good on the promise not to cut entitlements or benefits or however you want to call them for the lower classes that got him in the White House.
I think that means that for the free market to be free for most Americans, some kind of national agreement on what happens to people who are poor enough to be not just uncertain or insecure–as so many Americans are now–but scared. One part of that is people who are bankrupted by dying. I suppose that’s the reinsurance arrangement for high risks. Perhaps that can be made to work. Working at one remove (reinsurance) may be the best agreement of the federal government guarantee & the free market doing its work. But what about people who’d be bankrupted by going to the doctor anyway?
High risk pools have been around in the mandatory insurance markets for many years. The idea I have is a little different and no easy task A premium is assessed on every policy written in the US and remitted to the reinsurer. Anually, participating insurers submit reinsurance claims for their high risk class of policy underwriting losses above a preset limit, say, $50,000 per policy. The reinsurer pays those claims. Premium rates are adjusted year over year until actuaries get the formula right. To qualify for reinsurance, policies must be available to anyone, regardless of pre-existing condition, at least once per year for one month and must be renewable.
In my view, it is the Federal government who is tramping on State’s rights here, not the other way around. The states clearly have the right to regulate insurance; the fed, only as it affects interstate commerce. So I have no issue with the states holding insurers to task, making a sure that insurers are viable and honor their contracts. But to encourage a vigorous and competitive market for insurance, the federal government can play a role, allowing the purchase of insurance from any viable and responsible company. I’m suggesting that these policies be real insurance, not prepaid healthcare. PPO and similar networks could participate in group insurance, but not at prescribed prices, but by offering discounts from published prices marketed through group insurance. The policyholder must be the buyer here, not the insurer, if a viable market for healthcare can be established. Remember, a 50% discount at Mayo clinic may still be more than 10% off the cost of healthcare at your local hospital.
You missed the point on this. The idea is to level the field for group insurance other than employer provided insurance by allowing individuals to purchase insurance pre-tax and pre-withholding. That would allow individuals to lose the middle man, their employer, in the policy purchase decision. Employers could benefit, for a brief period, as some employees move to other group coverage and lessen their employer’s burden. Many would choose to pay their employees something in lieu of taking employer provided insurance. Employees are not stupid and employers understand that over the long term, the migration away from employer provided care will be better for all. Those who argue that this is a corporatist gift are ignorant, cynical and short sighted.
There are standard policy forms and language for most property and casualty coverages. There is no reason why health care cannot have the same. I would encourage, but not mandate this. It would simply make it easier to shop for a policy.
I’m of the belief that option “a” is a breech of our individual constitutional rights, despite the Roberts conversion of a “penalty” to a “tax.” However, so long as insurance is available to everyone, why not let people opt out? The “mandate” is simply another way of saying that healthcare is an entitlement. It’s not. The problem of those unable to purchase health insurance or health care is and will be with us always and is a matter of charity, whether private or provided through the state. The cost of this “charity” can only come down if we establish vigorous markets for both health insurance and health care.
The end often strips us of our dignity as well as our resources. The healthcare industry stands waiting to do whatever they can to prolong our existence. Reread Doc’s post of a few weeks ago, where the 911 dispatch was directing him to revive a man whose end was immediately inevitable. In any case, there are many things that can bankrupt us – recessions, wayward investments, lawsuits, job losses, medical bills, divorces. Of those, only medical bills can be insured. And yet, it is also the most likely to become reality as we age and our bodies break down. Fear of this issue is not irrational. These are the considerations of age. We can only hope to be prepared; government can provide no hedge or relief, nor should it.
…and make sure we differentiate one from the other. One is about access (care); the other is about affordability for major problems (insurance). Conflating the two got us knee-deep in this mess.
I think that that last statement is the crux of American partisanship right now, & for at least a decade. I do not believe there will be any electoral coalition in America that can summon a majority that’s ok with that last statement.
It seems to me that the American majority is firmly behind getting a sense of dignity out of government guarantees for healthcare. I don’t think that’s the last word on American government or citizenship, but I think that is the urgent, inescapable concern that stands for a view of the common good.
Before liberalism in the sense of individual freedom / rights, comes an American sense of democracy, a common good, a shared dignity.
Unfortunately, we – for all our vaunted individualism and autonomy – are as much a postmodern administrative state as any other…Attempts to transfer fiduciary responsibility to states and municipalities would be a devolvement on the way back to more individual responsibility and choice; the “Free-Fall Caucus” (cue Tom Petty) has delayed or denied this opportunity for the sake of standing for their own ideological purity – and reelection bids, it sure enough seems to me…
I agree the Freedom Caucus is purely idiotic in American politics.
I also think the GOP, hiding behind Speaker Ryan, wants neither to give Mr. Trump what he rightly wants for the electorate that sent him to the White House, nor to face the nation with its ruthless, but not clueless economic problems facing the nation. The reality is that if sound policy were proposed, it would be shouted down & would destroy the GOP electorally, not just the GOP majority. This is not only because Americans don’t have the guts to face up to their predicament. It’s also because they know too well the GOP cannot be trusted with the interests of the democracy. On the other hand, not even Speaker Ryan can see sense in the electoral coalition of 2016 & try to earn rather than betray the trust of an electorate that, for all its damnable ignorance of politics, has been betrayed again & again. It is more sinned against than sinner. It is, moreover, the electoral majority in America–if it does not command the respectful help of wiser politicians, what’s the point of having elections?
I guess the way to understand American politics in our times is this, men of principle participate in their own exploitation at the hands of unprincipled organizations that are all about being realistic at someone else’s expense.
Not sure that either party, as a whole, can be trusted to make hard choices. (Individuals may be.) As you say, TT, the electorate seems to want to be spoon-fed red meat. And pols courting reelection are only to happy to oblige…I don’t think there are grownups in the room anymore, at all. If there are any, they’ve given up.
I don’t want to hear any more about collegians in Middlebury, VT; we’ve got the same goings-on up on Capitol Hill. And the Permanent-Campaigner-in-Chief has washed his hands of the whole thing. (Cue: Dionne Warwick, “Promises, Promises”.)
Can you tell I’m ready to wretch? Oh, never mind; all that would come of it is a headache. :-)
Lots of naysayers, it seems, for a very legitimate and honest attempt to offer some solutions. It’s easier to see why the Republicans are having such problems after reading a few comments to your post @dougkimball. The bill just turned away treated the problem of disparity in employer provided as opposed to individual provided insurance in a typical Statist fashion. It used the tax code to give credits to individuals instead of cleaning up the tax code by taking the cost deduction away from employers. The former keeps control by the government. The latter gives control to the individual. It’s the easiest and simplest way to end the disparity. Without deductible expense employers will stop offering healthcare and start raising employees salaries as an added benefit instead. The individual market will naturally expand and with insurers able to sell across State lines and individuals able to take their policies from one employer to another, competition will become fierce.
However, in the final analysis, insurers only pay the outrageously high costs of the providers, plus some profit. Therefore Doug is absolutely correct in asking for transparency in pricing…no more $20 aspirins. Lasik surgery is a prime example. Being elective surgery, the doctors have to compete in the free market. As a result the prices have dropped by over half. This is a complex issue and I am sorely disappointed that our Republican legislators are so flat footed and ill prepared. We have a long way to go, obviously.
Well, the electorate trusts the two parties with different things. Put strongly, Americans know that conservatives in their hearts cannot believe anything but a flat tax is justice. Whereas that’s not how the federal government has ever worked, but especially it’s not the way it works now or for the foreseeable future. So they cannot trust that the GOP is really going to try to make government work in a reasonable way for the people who feel their security or dignity or both depend on it.
So some kind of detachment is needful, not least in order to avoid headaches, but also an attempt to figure out what might persuade the electorate to trust the GOP. What way forward there may be.
It goes without saying the Dems are not serious about sound policy, because they know they’ve got the majority with them, or almost, unlike the GOP, which is as good as wedded to its minority status…
Great comment. I’m glad this made main feed. As for me I’ll make no secret about the fact I’m burning out since Obamacare. That’s in spite of making more than ever and having a great reputation in my little area. Changes must happen or we risk losing a culture of excellence only to be replaced by a DMV.
There are also the issues of pre existing conditions and individual mandates to purchase insurance. Doug Kimball is attempting a solution by charging everyone who purchases insurance a “tax” (don’t call me John Roberts) on their policy to indemnify insurers who take these customers. I honestly have no solution. It seems that if we cannot force people to buy insurance when they are perfectly capable of such expense. why do we force medical providers into treating them without receiving cash payment in return? These people are truly selfish deadbeats. For the other folks who would like to behave responsibly let them pay what they can and our charity and taxes will have to do the rest.
Like I said, I don’t have solutions for these issues.
One consequence of Obamacare and the it takes a government village is the dying and death of charity. I’ve done more free work than I’ve made in life ( I think at least but whatever, it’s been a lot. ) and people like me are going by the wayside. The days when medical people see the suffering poor and feel the tug of God’s expectations of compassion and decency are dying off. It started with Medicare for the elderly and in an odd way our profession sold its soul for government largesse.
This is another, and perhaps the most dangerous, problem. Our great medical providers, such as yourself, are giving up, losing enthusiasm, looking to retire. And yet we are doing little to encourage more people to become healthcare providers. All of the energy is focused on getting more people insured and in the system. Yet nobody seems concerned that doctors probably end up with $500K in debt by the time they finish med school. Are our smartest,most capable even entering the healthcare profession anymore? They are better off becoming lawyers or stockbrokers. Doctors have been forced to do so much computer work that many have given up their individual or group practices and become employees of hospitals.
Hang in there, Doc.
This was one problem I had with the whole “Faith-Based Initiatives” thing…Faith communities and government money don’t mix well…
Too late, Doug.
From what I’ve read, apparently the US Constitution only permits the GOP House to make ONE effort to repeal Obamacare. They cannot continue to work on repealing it, and they can never submit a better bill to the Senate or to the president. The ACA is now the law of the land forever.
From what I’ve read.
/sarc
I’m confused. Business expenses are always deductible in arriving at an entity’s gross income, with very limited exceptions (charitable contributions and entertainment expenses.) So employer health care premiums are either compensation, hence subject to FICA and Medicare (at both the corporate and individual level) and subject to individual income taxes, or they are not. Since I’m never interested in any policy that provides the federal government with additional tax revenue, I propose that individuals be allowed to exempt the cost of insurance premiums, without limit, from income for both withholding and income taxes. That is how employer premiums are currently treated. I give everyone the break.