Edward Lazear:
The Congressional Budget Office’s warning that the Affordable Care Act will cause employment to fall by the equivalent of 2.5 million full-time workers is just the latest of Obamacare’s negative surprises. Unfortunately, House Minority Leader Nancy Pelosi’s statement that “we have to pass the bill so that you can find out what is in it” is proving to be depressingly accurate.
The law’s defenders legitimately argue that it is not sufficient merely to criticize the Affordable Care Act; responsible action requires proposing an alternative. Fortunately, Republicans have a good one, and it’s been hiding in plain sight for the past seven years. The plan was first described in President George W. Bush’s 2007 State of the Union Address, but it remains timely. This plan would remedy most of the major problems that exist in America’s health care system and cause less destruction with fewer adverse consequences than Obamacare.
There are two main problems associated with health care in the United States today. First, it is expensive. Health economists, among them Daniel Kessler at Stanford, have shown convincingly that the United States spends a larger share of its gross domestic product on health care than other countries (for example, about one-and-a-half times what Switzerland spends per capita) because of inappropriate incentives to use care efficiently. Patients who have insurance or rely on state funds to cover their expenses bear little of the cost of any treatment received, which causes them to use health resources as if they were almost free. This means that health care is overused and the scarce resources do not always go to those who need them most. Part of this is a result of a Tax Code that subsidizes expensive plans, which have low co-payments and overly extensive coverage. The second problem is the large number of uninsured Americans who do not have reasonable access to health care and who obtain the health care that they do receive in inefficient ways, such as using emergency rooms for minor ailments.
So what would the ideal alternative to Obamacare look like? It should provide cost-effective care and the quality treatment that Americans deserve. Effective reform should discourage over-insurance that results from the subsidy of so-called Cadillac plans that pay for basic, inexpensive and predictable procedures and have patient co-payments that are too low. Reform should encourage consumers to use America’s scarce health resources efficiently by inducing them to get tests and treatments that are justified instead of those that are selected because they are almost free to the decision-makers. Finally, reform should make health insurance available to the vast majority of Americans, some of whom cannot afford insurance without help.
The Bush 2007 plan achieves these goals.
From page 2 of the article:
So, every individual taxpayer would get a $7,500 tax deduction for health insurance, and every family would get $15,000.
Let’s assume that an individual taxpayer had taxable income of $36,250 last year. That would put him or her in a 15% tax bracket. The 15% rate would actually only apply to that portion of taxable earnings in excess of $8,925, with 10% applying to the portion below that, but for the sake of simplification we’ll assume it’s 15% on the entire $36,250. Keep in mind that assumption this will overstate how much savings result.
If you get a $7,500 deduction to buy health insurance, that would reduce your taxes by $1,125. Divide by 12. Do you think you can get adequate health insurance for $93.75 per month?
Whatever the difference between $93.75 and your monthly insurance cost is, that amount will be out of pocket. And under the Bush Plan, if your employer pays any portion, that portion would be added to your taxable income. It’s the additional revenue the government would pick up by taxing what employers pay that would supposedly render the plan revenue-neutral.
This is an example of a shell game. It’s pretending to do something, while actually doing nothing.
@Greg: Well, Greg, how’s “free” working out? $2 trillion over 10 years, higher premiums and copays AND we will still be left with 30 million uninsured. AND lose jobs.
Perhaps the reason health care reform hadn’t already been done is because it’s HARD and no one had come along with the attitude of “to hell with consequences; I just want to say I passed health care reform!”.
Maybe this plan isn’t perfect. Perhaps it is rife with unintended consequences as well. But it would HAVE to be better than this catastrophe.
While it is true that some with low co-pay health coverage may go to their provider’s clinics for minor problems, placing the blame on them for the expense of healthcare is a bit disingenuous. Yes, they tie up resources unnecessarily, and increase costs to the insurance providers, but (aside from emergency room visits for non-emergencies,) that is not really why treatment or procedures are expensive.
It would be more sensible to teach individuals when to, and when not to, go to the clinic or emergency room, and to provide first aid guides (perhaps via an AMA or NAD managed online first aid treatment website,) for home self treatment.
The poor and illegal immigrant’s overuse of emergency rooms for minor issues, in order not to have to pay for treatment, is however a valid concern that needs to be better looked at, as this does increase costs and treatment wait times unnecessarily. A better solution here would be to run partially subsidized clinics for the poor and indigent.
One thing that has been ignored in the whole discussion is that many hospitals used to be non-profit. This changed in 1965 when Medicare and Medicaid programs began increasing the costs. New diagnostic tools, procedures and equipment have a price tag that adds to the costs.
For profit hospitals are in the business of making money. Stories of deceptive charging practices makes this evident. There is also a tendency for doctors in for profit medical businesses to order unnecessary tests. This makes more money for the hospitals and increases costs to the patients and their insurance providers. HMOs caught on to this long ago, which is why they will often refuse to cover tests they consider unnecessary.
Unfortunately that means the patient will have to pay for these extra costs out of their pocket or their credit rating will suffer. For-profit nursing homes began to become established nationwide in the late 1960’s that took on medicare patients. Surprising to many family members was that aside from receiving Medicare funds for their services, these hospitals also began to profit from filing “estate recovery” liens on the estates of their late patients. a practice that has been financially lucrative for these corporate hospitals. Nursing home admission usually underplays the signing of lien agreements to patients as a minor formality. The shock comes later when “estate recovery” liens in the thousands of dollars hit their bereaved survivors. While state and federal governments regulate the operation of hospitals, clinics and nursing homes, there is little daylight into how just how much regulation is done on the truthfulness of medical cost charges to patients and their estates.
We as patients need to be very concerned about just how widespread hospital is. Overcharging, incorrect, deceptive and even fraudulent billing by the medical industry, and the possibility of subsequent estate recover abuse or fraud by medical providers without fair review or arbitration. Is anyone really looking out for us in this? This is even more important now that the government will be joining in the “estate recovery” game.