A Healthcare Compromise

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Obama’s health care initiative is in trouble. Leftists are unwilling to support any proposal that does not include a government option, and moderate Democrats are backing away from any proposal that does. In his search for some sort of middle ground, the President will likely repackage the public (government) option as a co-op or partnership. Others will be calling for compromise legislation, as if a united Democrat party needs any Republican help. To those on the left, however, compromise means one big step toward socialized medicine instead of two. Olympia Snowe’s so-called public option trigger is an example of the type of compromise we should reject.

But there are some practical ways conservatives seeking market-oriented improvements can work with those on the left. Changing the IRS code to replace deductions for employer-provided health insurance with a personal deduction would enable Americans to enjoy the same tax benefits when they obtain their own coverage. Allowing individuals to purchase coverage across state lines would make markets more competitive. Tort reform would put a lid on some of the frivolous lawsuits that surround medical practice. Clarifying the fourteenth amendment so that children of non-Americans born in U.S. hospitals do not automatically receive citizenship (and government benefits) would play a role as well, as would deporting illegals who can’t pay their medical bills.

What should we be willing to give up in a compromise deal? Government already plays a big role in our health care system, and this is unlikely to change. One possibility is to remake part of the government function without expanding its reach. I proposed my own compromise alternative in March to address the need for basic care for those who can’t get coverage or don’t want to pay for it. Current low-income programs (Medicaid, SCHIP, etc.) would be scrapped and those without coverage would pay a fixed percentage of their income for a basic, no-frills plan funded by government but administered by private insurance companies. Participant contributions would be matched dollar for dollar from the general fund. Deductibles would be high and coverage limited because the pool of funds could not increase unless those paying into the system paid a higher percentage of their income, which would create an incentive for those making the most money to get private coverage. The idea was to create a barebones plan that makes basic coverage available to the limited number of Americans who fall through the cracks AND requires those filling up the emergency rooms to pay into the system. It was also designed with an internal mechanism that would keep the plan small so private insurance could flourish.

Another possibility is to provide universal (very) high deductible coverage to every American, perhaps kicking in after anyone spends more than $15,000 on basic healthcare expenses in a given year. Such a proposal would not be too costly and would not require massive overhead to manage because only a small percentage of Americans (not including those in Medicare) would need to make a claim in any given year. The benefits could be substantial:

1. Americans with preexisting conditions would have a ceiling on their annual expenses. Granted, $15,000 is still a lot to pay, but it provides a safety net at some level.

2. Insurance companies would be more likely to insure those without preexisting conditions because they would not be responsible for reimbursing basic care beyond the $15,000 level.

3. Premiums would fall because insurance companies could be reimbursed for catastrophic care, all Americans would be paying into the system, and the amount of unpaid medical bills providers written off by providers would fall.

4. Americans who save their own funds (perhaps through medical savings accounts) could forego insurance altogether if they wish, knowing that a major illness wouldn’t wipe them out if they had adequate reserves to cover the $15,000 deductible.

If you’re skeptical, remember that we’re talking about a compromise here, a move in the right direction. Both proposals would provide some sort of coverage to ALL AMERICANS (something the Democrats’ proposal won’t do) while providing an incentive for Americans to get insurance in the private sector. Couple this with some of the earlier reforms I mentioned and you might have a package worth considering.

Perhaps the biggest advantage of this type of compromise is that it meets the left’s stated concern-ACCESS for all Americans–without meeting its real concern, ENTITLEMENT. Democrats who refuse to support such a deal will be forced to acknowledge their real position, that some Americans should accept financial responsibility for the healthcare of others, and that a government-run plan is the solution. These are not winning arguments with most voters.

The truth is that this type of compromise won’t be good enough for the majority of Democrats who are fixated on complete government control of the system. In the mean time, we must watch out for so-called compromises that increase the role of government. We’re starting to win the battle. Now’s not the time to quit fighting.

9 Comments

9 Comments

  1. proudlefty  •  Sep 5, 2009 @12:17 PM

    what’s so bad about a public option? if you don’t want it, you can stay with your private insurance.

  2. John Parnell  •  Sep 5, 2009 @12:34 PM

    Public (government) insurance underpays for services, which means health care providers have to charge private insurance providers more to cover the loss. This already happens with Medicare, which is why many doctors won’t even see Medicare patients in the first place. A public option would be cheaper because the government would mandate reimbursement levels for hospitals and doctors. To make up the difference, health care providers would have to deliver less coverage (ration care) while transferring even more of the loss to private insurance providers. This would raise private premiums further and more people would opt for the less expensive public option. The cycle will continue until private coverage is out of reach for most Americans and we’d essentially have a single-payer system. This is why “public option” is code for “single payer.”

  3. jeff  •  Sep 5, 2009 @3:53 PM

    i love all of these code word phrases especially “single payer” – which means someone else is going to pay my bill!!!! its the same old game of the non-producers using the gov’t to steal from the producers…at this point i’m in favor of the whole system collapsing so that all the freeloaders will have nowhere to turn…

  4. xfactor  •  Sep 9, 2009 @10:25 AM

    What would be the ideal system if you start from scratch?

  5. John Parnell  •  Sep 9, 2009 @10:53 AM

    IF WE COULD START FROM SCRATCH, we would certainly not want a single payer (government) system, as Obama once suggested. Government should play a role, but a minor one. Here are the basics that come to mind:

    1. Tort legislation. You can sue your doctor, but with a reasonable limit on punitive damages.
    2. Federal government funded services when clearly in the “general welfare,” such as immunizations, flu shots, etc. Just basic prevention, available to everyone.
    3. Federal government covers health care expenditures over 20K in any given year for any person, any age. This would take the bite out of a medical catastrophe, would not be too costly to fund, and would make insurance more accessible/affordable because insurance companies wouldn’t have to pay more than 20K on a person’s behalf.
    4. State governments decide how to deal with the poor.
    5. Insurance companies can cover (or not cover) anyone they like, but they would be prohibited from reducing or dropping coverage from anyone who is paying premiums in good faith.
    6. Assuming we have an income tax…an individual tax deduction for health insurance AND/OR personal contributions to a medical savings account. This is more effective than deductability only when the employer provides coverage.

    These ideas would need some polish, but the point here would be to involve the federal government only where there is a strong national interest (spreading disease, hospitals delivering expensive services to non-payers, etc.), encourage individuals to take care of themselves either through insurance or their own savings, and allow the states to deal with other problems as they see fit.

  6. BXman  •  Sep 9, 2009 @8:08 PM

    Hey Parnell, any thoughts on the speech?

  7. John Parnell  •  Sep 9, 2009 @8:37 PM

    Obama is a great orator. Unfortunately, his speech was factually challenged and manipulative. A few observations…

    He opened with a scare tactic about sick Americans losing their health coverage to evil insurance companies. Later he castigated talk radio and others for using scare tactics…Thanks to Wilkow, Hannity, Levin, Church, Limbaugh, Beck, and many others for exposing the maladies of the original proposal.

    He claims he doesn’t want Washington to run the health care, but places so many requirements on what insurers must cover and how much they must pay in benefits. He even wants to force the evil insurance companies to accept applicants with pre-existing conditions, generating losses that must be passed on to the rest of us.

    He didn’t drop the government option, but failed to acknowledge that the bully power of Washington would inevitably be used to help the government plan “compete” with the privates. Recall that our tax dollars financed a “cash for clunkers” program after the federal government became heavily invested in GM. It’s taxpayer-subsidized competition.

    He insisted that his health care reform would not increase the deficit, which means he will tax the rich to pay for it. He repeated the “worst economy since the Depression” line, but failed to mention the Carter years.

    He castigated businesses that don’t provide health care as being irresponsible. There is no moral requirement that businesses must pay for health care for their employees.

    He said that there would be waivers for those who can’t afford coverage, but he didn’t say how he would determine who can afford what. Waivers can only be paid for by taxpayers. As Andrew Wilkow would say, person B would be paying for person A’s health care.

    He said he would require insurance companies and pharmaceutical firms to pay certain “fees” (taxes) to help reduce health care costs. These costs will be passed along to the rest of us.

    He also made several assurances about what his plan would and would not do, but then commented that details have to be worked out.

    He played the Teddy Kennedy card, politicizing the late senator’s death. If Teddy asked him to read the note after he died, then why did he wait 2 weeks to do so?

    I’m doing this on the fly and I’m only hitting the tip of the iceberg…I didn’t take notes…

  8. Steve Smith  •  Sep 16, 2009 @6:55 PM

    To Proudlefty:

    If my plan is through my employer then I don’t really have the choice whether I keep it or not do I? Doesn’t it depend on if the employer chooses to keep paying for insurance, when it will be cheaper to not offer insurance and just pay the fine and let all of the employees go to the insurance exchange?

    Another question that I posted in another article is what is the plan to get more doctors? If you add “X” # of people, won’t you need more doctors? Then, what will the incentive be to become a doctor when they are going to cut Medicare reimbursements?

  9. John Parnell  •  Sep 16, 2009 @8:02 PM

    The answer to your first question is rationing. Longer waits might keep us away from the doctor’s office as well. You can’t add more people to the system without more doctors unless you ration care…The answer to your second option is that the central planners will probably create incentives and offer scholarships that encourage people to go into medicine. This is an expensive option and would probably be factored into the education budget so that it doesn’t count as healthcare expenditures. It’s better to let aspiring doctors make the sacrifices on their own and then reap the benefits if they are successful.