Sunday, July 1, 2012

Pro Choice

The U.S. Supreme Court is starting to look like Britain’s National Health Service — you wait two years to get in, and then they tell you there’s nothing wrong. And you can’t get a second opinion.
- Mark Steyn

Let me get this straight. Say, with the ACA in place, you choose not to purchase a $15000, $20,000, $30,000 health insurance policy (that’s about what these things will cost with all the mandated accoutrements, bloated bureaucracy, political favoritism, et al). You will then be assessed a penal…er, tax, amounting to $700, $800, $900 or so. Under the new law you cannot be denied insurance. So, if you get sick, do the math, and calculate that you’re better off now buying a policy, you can. Only a moron is not going to opt to pay the tax, especially since the Supreme Court has decriminalized the act of non-compliance.

Misguided SCOTUS decision or no, this law will collapse.

My vision of an ideal health insurance system goes something like this. I make a list of items I'd like covered, then go online and compare 6 or 8 or 10 (or more) different plans offered by insurance companies nationwide. (I'm allowed to purchase policies across state lines). If I want a plan to simply protect me from catastrophic expense (true insurance) – due to cancer, heart disease, a crippling injury – I can select such a plan. Or I can choose a more comprehensive plan, with low deductibles and pay the higher cost commensurate with such a plan. Importantly, I get to choose - If I decide I don’t want to subsidize rich lawyers’ contraceptive bills, I’m free to decline the honor.

If I have limited means I may qualify for a government subsidy. I just enter my annual income, total assets and dependent information into a calculator tool on the website and the amount of my subsidy is displayed. That information can help me decide which plan to choose. If I have a pre-existing condition, I cannot be denied coverage. The higher costs that insurance companies incur by the mandate to cover these high risk patients are covered by a pool of money funded by a percentage of their profits. I do not get special treatment if I am old. There is no Medicare. That massive, immoral transfer of wealth to the idle, affluent aged from the working, less affluent young is ended. The only factors determining my qualification for government assistance are income and wealth. This frees up an enormous source of money and directs it where it is needed most.

(Note - There is a marked difference between income and wealth, something the president either doesn't understand or purposely ignores. He will talk disparagingly about "miilionaires" and "billionaires" and then propose punishing "those earning over $250,000".)

Eliminated will be what has been called the original sin of American health care - the current tax advantage afforded workers obtaining their insurance through their employers. This World War 2 era policy was concocted to get around FDR's wage and price controls, giving employees "free" health insurance (Yay!) in lieu of higher income. Government's first major intrusion into health care is arguably its worst, introducing and perpetuating the concept of patient unaccountability. Like an all you can eat buffet, patients are encouraged to consume at will. And health care providers are only happy to keep the dishes coming. Soaring costs are the inevitable result. Especially hurt are individuals purchasing insurance on their own. Another consequence - lost revenue from this untaxed gift, which has grown exponentially over the decades. Either we tax health insurance benefits as regular income - good luck with that - or we extend the tax benefit to all individuals, regardless of employment status.

There is no mandate to purchase insurance. Anyone foolish enough not to see the value of low cost health insurance deserves to reap the consequences of his (in)action. And don’t bother with the increased emergency room utilization argument. Overuse of emergency rooms by the uninsured is an insignificant fraction of total health care spending. In any event, universal, mandated health insurance doesn’t reduce ER use. Such was the case in Massachusetts where the overburdened system has led to greater ER utilization.

A free-market based system puts the consumer in charge of health care decisions and, as with almost any other free-market based commodity, (think computers), substantially reduces costs. To push the cost curve down even further, some sort of tort reform is required. This would include capping pain and suffering and punitive damages and throwing out frivolous lawsuits and punishing the litigants who bring them.

So how do we get to my idealized scenario? Well, Holman Jenkins in today’s WSJ suggests one pathway without repeal of the ACA.

…Republicans already are lip-committed to a national health-insurance charter that allows insurers to design their own policies and market them across state lines. Republicans are also lip-committed to a tax reform to equalize the tax treatment of health care whether purchased by individuals or by employers on behalf of individuals.

Now just modify the Affordable Care Act so buying any health policy authorized by the new charter, no matter how minimalist, satisfies the employer and individual mandate.

What would follow is a boom in low-cost, high-deductible plans that leave individuals in charge of managing most of their ordinary health-care costs out of pocket. Because it would be cheap, millions who would opt not to buy coverage will buy coverage. Because it will be cheap, companies will direct their low-wage and entry-level employees to this coverage.

Now these workers will be covered for serious illness or injury, getting the rest of us off the hook. As they grow older, wealthier and start families, they will choose more extensive but still rationally limited coverage. Meanwhile, the giant subsidies ObamaCare would dish out to help the middle class afford ObamaCare's gold-plated mandatory coverage would be unneeded.

With consumers shouldering a bigger share of health expenses directly, hospital and doctors would discover the advantages of competing on price and quality. This way lies salvation. In the long run, whatever share of GDP society decides to allocate to health care, it will get its money's worth—the fundamental problem today.  

A prediction - Consistent with the mainstream media's continued fawning idolization of its new hero, John Roberts will grace (disgrace?) the covers of Time and Newsweek this week.

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