Tea Party Health Care Reform

Calivancouver, a liberal commenter on this blog, has published his own health care plan, based on the idea that Obamacare was pretty much a sop to various special interests that included lobbyist insertion of provisions favoring industry. The end result was an unintelligible hash that undermines its own goals. I am paraphrasing here, so he can correct me in the comments. Suffice to say that liberals weren't terribly pleased with PPACA.

People are starting to think again about health care insurance reform because there is a good chance that the individual mandate will be struck down and found non-severable. I think we have the opportunity to propose reform that is truly market based, both on the insurance side of the equation and on the medical delivery side of the equation. My point of departure is the "Freedom Coalition Agenda," that I periodically update (which predates my tea party involvement). However, the debate over Obamacare has brought more detail into focus. Here is the plan that John Mackey of Whole Foods proposed, my comments in italics.

1. "Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts." Patients who have skin in the game and market knowledge will reduce costs faster than any government program.
   


2. "Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits."
   


3. Allow competition across state lines.
   


4. "Repeal government mandates regarding what insurance companies must cover."
   


5. "Enact tort reform."


6. "Make costs transparent."
   


7. "Enact medicare reform." Medicare policies that are mimicked by the private sector are strangling the medical profession.
   


8. Revise tax law to make it easier to donate to those without insurance.

To expand on these points.

1. The government could help lead this effort by reforming first Medicaid, by turning it into an insurance subsidy program for the poor. But the program would require those in the program to pay a high copay until a low catastrophic cap was reached. Such a system would create a market for a system where people have more incentive to shop for best value in medical care. This system could then be applied to Medicare.


2. The next big issue is that health care is tied to employment. My first impulse is to forbid the offering of insurance through employment, but that would make a conservative social engineer, instead of a liberal one. Removing the tax advantage would at least set a level playing field. To date, the portion of employee compensation that comes in the form of employer health insurance isn't taxed as compensation. This ties employees to their companies and needlessly. You would think that liberals would be opposed to a scheme where tax policy gives corporations leverage over employees. However, I dislike schemes whereby the government imposes on employee relations, so I will settle for leveling the playing field.


3. Interstate competition is not the norm in insurance. Surely the federal government has the right to "regulate" as in "make regular" this portion of interstate commerce, by insuring that any insurance offered for sale in a state would be available in the fifty states. Increasing competition will probably be opposed by the insurance industry, but freer markets benefit consumers.


4. One size never fits all. So mandating coverage should be banned. Insurance is always tricky business, even homeowner's insurance, as Road Dawg can attest to. Along with no mandates will be the need to enforce clear language in policies and communications with policy holders. I am a libertarian, but not so naive as to believe that some insurance companies won't try to wriggle out of agreements to save money. Court is expensive for individual consumers, so regulation that enforces good practices of transparency and clarity will be necessary. But regulation should always aim for simplicity and this also needs to be part of a reform package.
   


5. With regards to tort reform, we have seen positive results in Texas, where access to care increased after passage of reform.


6. Cost transparency is important to enable process improvement and allow patient choice. Most people don't know the true cost of a medical visit, even after the visit is over. Here again, Medicaid reform could lead the way, by insisting that patients receive better notice and understanding of their bill.


7. Medicare policies with regards to reimbursement are arcane and lead to huge misunderstandings on what is covered and unexpected bills. Transforming Medicare to save it for those who truly need it, into an insurance subsidy scheme, will get the government out of the rule writing business and free up insurance plans to compete.


8. Allowing Americans to donate to those who need health care insurance might make little difference, but maybe not. I see lots of do-gooder millionaires wanting to pay more taxes. Maybe they could pay for poor people's insurance in the interim.

Some issues that are not really settled, but requiring discussion. The popular reasons for the health care law could be boiled down to two issues. First, there are many uninsured Americans. Second, many people with pre-existing conditions can't get health insurance. Dissatisfaction with one's own insurance was not an issue. My proposal:

1. The uninsured. It turns out that this group is not as big of a problem as one might think. The widely quoted number of uninsured of 46 million people vastly overstates the problem. Previous posts on the subject here and here. The actual number of poor uninsured citizens is closer to 8 million people. The simplest and least intrusive answer is to provide them a subsidy to buy health insurance. Further, this should be done at the state level. Even if done at the federal level it is a far better answer than the bill passed.


2. Pre-existing conditions. The best answer is to guarantee health care portability, in the same manner that we guarantee phone number portability when we change carriers. This would eliminate the tying employees with difficult health problems to their jobs. Ditto for their dependents. As we move to a system in which individuals pay for their own insurance, because it is not tied to their job, then this problem becomes moot. Children who are on their parents plans should be given the opportunity to convert that plan to their own personal plan as well. This would solve most but not all of the issues with pre-existing conditions. There are already programs such as SSDI to cover those with incapacitating disabilities, although that system also needs reform.

There are a few ancillary issues to deal with. First, Calivancouver likes emergency rooms, as an example, not as a place to visit. We do not refuse treatment at emergency rooms, but not everyone pays, driving up the price for the rest of us. If the reforms I suggest work out, only those with enough money to afford insurance but who don't carry it would become a problem, along with illegal aliens. For those who can pay, we might modify financial regulation to make sure that hospitals have the ability to collect from those who chose not to carry insurance, including head of the line in bankruptcy proceedings. Illegal aliens will have to be the subject of another discussion, as I have previously discussed the need for a comprehensive plan that includes enforcing the border.

The other issue is end of life care. This is where insurance transparency becomes paramount. People are going to have to make tough trade offs between paying higher fees that will cover expensive life extending treatments and thinking through what they leave to their heirs. This is a tough subject, but there is no free lunch. Someone is going to pay for expensive end of life care, we must as well budget for it now.

Sorry this ran long, but I think it necessary to put together real solutions that sustain liberty and keep government size to a minimum. The left's solutions usually fail, but often we have not put together our own policies, so we just get the next leftist solution after the last one fails. After Obamacare is rescinded, whether through the courts or elections, getting to work on real health insurance reform will become necessary. Best get thinking about it now.