In my last post, I questioned whether the Republicans have the courage to do what needs to be done with healthcare. Let’s talk specifics.
In an ideal world, everyone would purchase private health insurance to cover large, unforeseen medical expenses, and budget accordingly to pay for routine visits to the doctor. Those who genuinely cannot afford a basic policy would pay what they can, with government help in the equation. Insurance companies would be prohibited from dropping customers just because they get sick, so pre-existing issues would be a non-issue.
But we live in a different world. Healthcare is seen by many as a right without regard to cost. Unlike other forms of insurance that are purchased to protect against disasters, health “insurance” is considered insufficient if it doesn’t cover routine medical visits and prescriptions. This is a huge misnomer because insurance (by definition) is only intended to address the unexpected.
Our warped view of healthcare has created serious problems. EMTALA already guarantees “catastrophic care” for those who cannot pay for it, so why should low income Americans purchase their own? Over-regulation makes is almost impossible for consumers to handle routine medical issues efficiently. With co-pays embedded into every visit to the doctor, consumers have no incentive to shop around for the best deal. And billions are spent managing endless paperwork.
Obamacare has further distorted our collective notion of healthcare by over-subsidizing costs, requiring Americans to purchase insurance, while also requiring them to choose from a limited array of plans. Moreover, those who ignore the mandate and pay the “fine” instead need not worry; they can obtain coverage after they get sick from providers who cannot turn them away. Obamacare defenders demand that reform plans reinforce this monstrosity. Most Republicans aren’t addressing this head on.
Of course, we need to be realistic. There’s no way we will create an ideal system from where we are now. However, choosing the right kind of reform can be a huge step in that direction. Assuming we can’t rid ourselves of the income tax, here’s are a few basic steps that can be taken within the current system.
1. Repeal Obamacare but allow Healthcare.gov to continue without additional subsidies. It will die on its own as providers and consumers drop out.
2. Permit providers to offer catastrophic, “bare bones” plans, and permit consumers to purchase policies across state lines. Without co-pays governing every medical situation, costs and premiums for such plans will be much lower. This allows everyone to get a policy that does what insurance is supposed to do—take care of emergencies.
3. Replace the tax deduction for healthcare premiums with a direct write-off in an amount that would cover a catastrophic plan for most Americans. This creates an incentive for everyone to get a basic policy. There would be no mandate to purchase a policy, but not doing so means that you would forego the write-off.4. Create a high-risk pool to subsidize the cost of insurance for Americans whose current state of health prohibits them from purchasing a basic policy.
There are other good ideas as well, but by taking these steps, everyone will have access to a private, catastrophic health insurance plan. Those who do not purchase more extensive plans will be required to budget for routine health issues, with local health departments providing basic services to the poor.
Opponents would counter my argument by contending that the poor won’t have the same options as everyone else and simply won’t make routine trips to the doctor without low co-pays built into the policy. But insisting that policies cover regular doctor visits raises costs. If a large percentage of Americans had (catastrophic) insurance without co-pay features, then providers would respond by offering more basic, low-cost options. Changing the entire incentive structure for providers and patients is necessary to make this happen.
Government subsidies will be required if the truly needy are to obtain insurance, but this can be managed if we are willing to institute real reforms. I’m just not sure most Republicans are willing to do so.