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Seeking a Healthcare Compromise

November 04, 2010

By Diana Furchtgott-Roth

At a post-election news conference on Wednesday, President Obama said, “I’ve been willing to compromise in the past and I’ll be willing to compromise going forward.”

How about health care?

Repeal of the Patient Protection and Affordable Care Act is unrealistic. An outright repeal cannot get through the still-Democratic Senate, and the president would veto it.

But revision might let Republicans modify some of the most objectionable provisions, and the surviving Democrats, after facing down outright opposition to the health law during the campaign season, might be happy to collaborate.

Revising the health care law would be an opportunity for the new Republican majority to showcase its new ideas. That might endear it to independent, centrist voters, who will hold the key to the 2012 presidential election.

Here are some provisions that should be modified, changes that one hopes might be acceptable to the Democrats:

Allow All Health Insurance Plans to be Listed on Exchanges. Generally, under the new law, only health insurance plans that meet the basic benefit criteria will be listed on the state exchanges and available for purchase with government provided premium credits. If all plans could be listed, rather than just plans that offer the required benefits, consumers would have more choices.

And the basic plan is expensive. Plans have to take anyone who applies, regardless of medical history, with no dollar cap on coverage, and offer dental and vision care for children, mental health and substance abuse services, no copayments for routine care, and coverage of adult children up to age 26 on parents’ plans.

This makes it difficult for plans to compete on the basis of price. But if any plan could be listed on the state exchanges, then people could choose a less expensive plan if they wanted to buy one, a Ford rather than a Cadillac.

In fact, the Department of Health and Human Security has granted dozens of plans waivers of the requirements for the next year because plans offer less expensive plans with lower benefits.

Give All Americans Tax Credits for Health Insurance Purchase. Beginning in 2014, the new health care law will offer refundable, advance premium credits to those with incomes between 133% and 400% of the federal poverty line. (Those below 133% of the poverty line will go on Medicaid.)

These credits would go to a family of four earning $88,000, far above the median household income, currently $50,000. Instead, as Representative Paul Ryan has proposed in his tax plan, give all Americans vouchers or tax credits to purchase health insurance. Mr. Ryan has suggested $5,700 per family or $2,300 per individual. This amount could be adjusted up or down depending on income.

Congress could pay for this by ending the tax-free status of employer-provided health insurance. In 2008 the Joint Committee on Taxation estimated that a similar proposal, replacing the tax break with an individual deduction for premiums, would save $552 billion over 10 years.

Although tax-free status of employer-provided health insurance has been untouchable, the new health care law might have put the nail in the coffin for this tax exemption.

Here’s why. The new health care requirements are so burdensome that many companies are likely to end their health insurance plans, pay the $2,000 annual per worker penalty, and have their employees purchase health insurance on the new exchanges. With fewer companies offering health insurance, it would be easier to eliminate the tax break.

Allow Plans to Compete Over State Lines. Breaking down barriers to national competition in insurance (which, by act of Congress, is still regulated by states) would enhance competition and give consumers more choices, just as consumers are allowed to buy goods and services from companies in other states. Prospective purchasers should be told the state of origin so that they can seek information about the vigor of each state’s regulation.

Since compromise is a two-way street, Republicans could withdraw their objection to mandatory purchase of health insurance. Since our society cures people who become sick or injured at public expense if they do not have health insurance, it is reasonable to ask people to buy insurance.

The objectionable part of the new law is not that everyone should have to buy health insurance, but that everyone should have to buy expensive health insurance, which leaves the young subsidizing the old. A broader choice of health insurance plans, just as Americans have for other kinds of insurance, would make the mandate more reasonable. Similarly, we require people to buy clothes rather than going around naked.

Some fully-developed health care proposals, with scope for a wider choice of plans, have been drafted and are ready to be debated in committee.

The Empowering Patients First Act, H.R. 3400, sponsored by Georgia Congressman Tom Price, a physician and chairman of the House Republican Study Committee, allows individuals a tax deduction for health insurance, just as employers have such a deduction. Workers who want to use their deduction to continue to be covered by their employer can do so, and those who want to purchase health insurance on their own would have their own tax deduction.

Wisconsin Congressman Paul Ryan and Oklahoma Republican Senator Tom Coburn (also a physician) have cosponsored The Patients’ Choice Act of 2009. Their bill uses state exchanges as portals where Americans could take their tax credits and choose private insurance. All insurance plans licensed in a state could participate in the state exchange, and premiums would be set by the different companies.

Plans could include high deductible plans combined with health savings accounts, or more traditional managed care or fee for service plans. Those with serious chronic illnesses would be placed in special plans.

This week’s elections showed that Americans once again want change. Mr. Obama’s stated desire for compromise is commendable, and health reform is the place to start.

Original Source: http://www.realclearmarkets.com/articles/2010/11/04/seeking_a_healthcare_compromise_98742.html

 

 
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