Healthcare is a complex problem. It’s an emotional, literally life and death issue, and it’s getting more expensive every day. I’m going to walk through the major issues in this blog. I’ll also put a proposal on the table.
Before I proceed, I want to underscore two points. First, the U.S. provides the best healthcare in the world. You can argue about costs or access, but the overall quality in unsurpassed. Second, private healthcare works for most Americans. An estimated 45 million Americans lack health insurance, which means that 85% have it, either through private or government sources. Many of the 45 million are covered by Medicaid or choose not to purchase coverage, so the number “left out” of the system is even lower. These facts should be obvious to most Americans, but they seem to be forgotten in the demand for “change.”
There are some key challenges with healthcare, however. Those who can’t afford care can get it anyway. Medicaid and other government programs provide health care for the poor and Medicare provides coverage for seniors. Further, the Emergency Medical Treatment and Active Labor Act (EMTALA) passed in 1986 guarantees emergency treatment to anyone regardless of citizenship, income, or legal status. The charges for those who do not pay for such care are inevitably absorbed by those who do. While arguably a humane policy, the EMTALA has made illegal immigration more attractive and has also created an incentive for some Americans to avoid purchasing health insurance. The most important part of a health care policy is that it covers you in the event of a major catastrophe. Why pay the premiums when that likelihood is fairly low and the government has provided a safety net?
What this means is that a complete free market solution will not be possible. The government will always provide coverage for a significant number of Americans. Many who can “afford” some coverage will simply opt out because of the high cost and the existence of the EMTALA safety net.
There’s a sad irony here. The wealthy never have a problem getting the health care coverage they need. The poor, covered by government programs, have fewer choices but receive care at little or no cost. The middle class—too rich for government assistance—pays inflated prices for its health care to help cover those who don’t pay at all.
There are two roads we should not take to solve this problem. Requiring employers to pay for coverage is NOT the solution. There is no moral reason why an employer should be required to accept financial responsibility for an employee’s health just because he or she is hired to perform a task. Offering health care benefits is a good thing, but it should not be mandated. Consider how costly benefits have contributed to the demise of the U.S. auto industry.
Nationalized health care for everyone is NOT the solution either. IT WILL RESULT IN RATIONING FOR ALL OF US. Some on the left claim that this is a baseless charge designed to scare Americans. I suggest that they read the British press, where administrators of arguably one of the best socialized systems frequently use the term “rationing” when they discuss the tough choices surrounding who gets access to expensive treatment and who does not. This is why many Brits purchase private health insurance. We simply lack the doctors and medical infrastructure to provide “free” healthcare to everyone without empowering bureaucrats to decide who gets coverage.
Here’s a second irony. Some in Canada and Western Europe chastise the U.S. as “the only developed nation without universal healthcare.” Perhaps they should remember that the U.S. represents the primary market for the development of many new treatments and drugs because of its private system. The U.S. is also the “safety net” for the wealthy in other countries who can’t get the treatment they desire or don’t want to wait in line for it.
HERE’S MY PROPOSAL: Replace all low-income health insurance programs with a no-frills universal plan. Other than basic preventive care (vaccinations, etc.), those covered could not choose their own doctors, would be responsible for sizeable co-pays, and could see specialists under the plan only when absolutely necessary. Only essential medications would be covered–no Viagra. Expensive, recently developed drugs without generics would be covered only in extenuating circumstances. Patients would be responsible for a sizeable amount of hospital or ER treatment each calendar year, perhaps $2000-3000. Private insurance companies could bid for the right to administer the plan in certain geographical areas. The point here is to provide a minimum level of no-frills treatment at a rock bottom cost. The details would need to be ironed out by experts in the field.
THOSE WITH HEALTH INSURANCE WOULD NOT BE INCLUDED IN THE PLAN. THOSE WITHOUT COVERAGE WOULD BE REQUIRED TO CONTRIBUTE TO THE PLAN THROUGH A FLAT PAYROLL TAX. Everyone in the plan would pay a flat percentage, perhaps 7.5% of gross wages. The federal government’s contribution would be capped in some definable way, perhaps 50% of the total cost.
Here are the advantages of my proposal:
1. Everyone would have access to basic, no-frills coverage.
2. Those in the barebones universal plan would be required to pay into the system. At present, many are not paying anything and have no incentive to use the system wisely. Most conservative proposals are designed to make it easier for individuals to obtain insurance in the private market, but they don’t address those who refuse to do so.
3. Financing the plan with a flat payroll tax makes it more expensive for those who earn more, encouraging them to get their own private insurance. The goal here is to get as many Americans into private insurance coverage as possible.
4. Private insurance premiums would decrease because the barebones plan would cover most of the unpaid medical bills that currently choke the system.
OK, there are some drawbacks:
1. The no-frills plan would inevitably lead to some rationing. The advantage of my proposal, however, is that it would limit such rationing to those who are receiving government assistance through the no-frills plan.
2. Some conservatives and libertarians would lament the fact that those without private insurance would be required to participate. I don’t like this either, but the truth is that those who “go it alone” inevitably ask society to step in when a medical emergency occurs. Given the EMTALA and America’s penchant for generosity, the American taxpayer will always underwrite catastrophic coverage for the uninsured. We may as well face it.
3. Liberals would contend that such a plan would strap the poor with a hefty payroll tax. At a 7.5% rate, a family of 4 with a gross income of $25,000 would pay $1,875 a year for family coverage, a bargain even for a no-frills plan. The truth, however, is that other taxpayers would have to cover the rest of the expenses. Why is it unreasonable to require the poor to make a significant contribution toward their own coverage? How many American’s who “can’t afford” health insurance spend $1,875 annually for their cell phones and satellite TV? It’s critical that those benefitting from the program pay as much as they can.
4. Once such a plan is instituted, socialists would constantly campaign for greater contributions from the general fund. This is a real problem. Perhaps changing the government contribution should require a supermajority.
As you ponder this proposal, keep in mind the multiple competing objectives we need to accomplish:
1. MAINTAIN private access to the best system in the world and creative incentives for everyone to pursue private coverage.
2. COVER as many Americans as possible.
3. REQUIRE that recipients of federal assistance pay for as much of it as feasible.
4. MINIMIZE the role of the government in the process.
My proposal is not perfect, but I think it does a better job meeting these objectives than the current system does, and it’s far superior to what we’ll get if we stay on the sidelines. Its real strength is the fact that it delivers a level of care to everyone without a government takeover of the system. Conservatives must take control of this issue with a comprehensive proposal that leverages the market and garners political support from moderates. If not, we may be in for a complete government takeover that will be difficult if not impossible to undo down the road.
I gotta admit I wasn’t sure about this proposal the first time I read it, but we have to face the facts. The system is what it is and we need to fight it where we can win and accept what we can’t change. Taxpayers are already paying a fortune for universal ER coverage for the uninsured and those who don’t pay need to starting paying what they can if they expect me to help. You’re definitely right that conservatives had better develop a plan and sell it to the public before Obama gives us Hillarycare II. We’re paddling upstream now.
Excellent analysis and proposal Dr. Parnell. I especially like the flat payroll tax for those without existing coverage. Looking forward to your next blog post and appearance on the Wilkow Majority. FTW!
I have a better plan. The short version: The government collects a flat tax (not even going to come up with a number as I am just some guy) on the first $X of income, we’ll say up to 2X the cap that Social Security is for now. From this pland, the government pays for all emergency and catastrophic care, as well as preventative medicine (i.e. immunizations) at a rate determined by some group of experts. Non-essential care (i.e. Viagra, etc) will not be covered at all. The rates should reflect the minimum that a majority of doctors/establishments would be willing to work for. Individuals can eitehr pay themselves, or get insurance to make up the difference. Also, failure will not be rewarded. The costs of hospital borne infections, for example, will be the sole responsibility of the hospital.
My plan’s main benefits: 1) Everyone gets the benefit of the plan – and can choose how much they’re willing to spend to “upgrade.” 2) By paying for preventative care, small problems will hopefully be caught before they become bigger, more expensive problems. 3) The catastrophic risk will be spread out among more people, bringing the average costs down.
The downsides are are: 1) Someone will enevitably have to set the rates, though it will hopefully be doctors – not Congress or an accountant at an insurance company. 2) I can’t figure out any good way to adjust for risk that wouldn’t lead to a train wreck of a bill within a few years.
I hear a lot of feedback from people on this issue. One of my concerns is keeping the government out altogether. What about adding in a tax line for companies or organizations to donate to this program. Or allowing access to drug companies to these patients for clinical trials of (human test ready) new medications.
On the whole I love your ideas. Not just limited to this one but this one is excellent as well. Thank you.
Great post. I like how you’ve outline a well thought out proposal. Most discussions on health care do very little to provide solutions. Yours on the other hand is a sensible and balance argument.
One point I would like to see you address is our shortage of primary care physicians.
One of the reasons medical students are not opting to enroll in primary care specialties is due to the discrepancies in salary between primary care – for example, internal medicine, family practice and pediatrics – and medical sub-specialties such as cardiology, orthopedic surgery et al. Currently, primary care doctors are experiences decreases in reimbursements and increases in administrative cost providing health care (ie insurance administration cost, malpractice cost, etc).
In my view of health care reform, we need to also address the challenges primary care physicians face. Otherwise who is going to care for all those newly insured Americans?
Brandon
@pediatricinc
pediatricinc.wordpress.com
Good points, Rob & Brandon. Unfortunately keeping the government completely out of this issue is not possible. We need to pick our points of attack. As Pat Buchanan pointed out in his Human Events piece (http://www.humanevents.com/article.php?id=30906) , we are already well down the road to socialism (if not already there). This is true in healthcare.
Patient access to clinical trials, the shortage of physicians (with years of training required), the need for more beds in hospitals, medical liability reform, and even illegal immigration are but some of the related issues that need to be addressed. Simply taxing “the rich” to fund unfettered universal health care ignores serious problems on both the demand and supply sides of the equation.
I heard a caller on Andrew Wilkow today state why just give the 45 million uninsured a debit card for healthcare with a limit of 1 million dollars. At first i thought it wasn’t that good of an idea but after thinking about the 684 billion downpayment Pres. Obama wants 45 million sounds less likely to bankrupt our future.
Dr. Parnell, Great thoughtful analysis and proposal. You are on to something. Pragmatically, a blend of gov’t and private coverage is a good compromise. A total free market system would work best, but we are too far down the road to go back now.
Per Brandon’s point above, I read Sally Pipes book (Top 10 Myths of American Health – one all should read who have a horse in this race) and was alarmed to see the differences in income between US and Euro physicians. It begs the question…who will want a career in medicine or allied health?
Anyway, keep on writing. I have turned on several of my friends (and adversaries) to your blog and they all love it for its even-handed approach.
Idea for future blog…explain the “Bush Tax Cuts”. What were they, what were the results, what happens when they expire?
USA should stay away from the catastrophic “European Social Model”.
Leftish always says that swedish social model is something to strive after… but, thats bullshit. Here in sweden people have to wait for health care for months (sometimes years). Sometimes people die during their waiting for health care.
(as in all socialist solutions you get a queue….)…
Now will the communist in the white house use the finanse crises to do a communist revolution in the USA…
Read more here: The Great Non Sequitur – The Sleight of Hand Behind Obama’s Agenda
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/05/AR2009030502951.html
Learn from the European misstakes…
Munkhammar: European dawn
http://www.timbro.se/europeandawn
Another book for free as PDF
Beyond the european social model
http://www.openeurope.org.uk/research/fullbook.pdf
I think we should start be repealing EMTALA. Second, deny illegals healthcare. Third, elimniate federal subsidies for state Medicaid programs. Fourth, restructure tort laws by enacting “loser pays” policy. Fifth, create as many tax incentives as possible for individuals who provide healthcare for themselves. Finally, Implement Dr Parnell’s plan as outlined above with these revisions.
I will own a bit of sarcasm in my email, but it always stings when I see otherwise decent people have no problem with us having such a precious gift as our healthcare as a for-profit business. To many, including myself, this has a moral as well as humanitarian component to it. Since our current system was set up to provide less care and make huge profits this would fall under the category of greed. When I was growing up, no one went broke because they got sick. When did the system change?
http://www.rockridgeinstitute.org/research/rockridge/the-logic-of-the-health-care-debate@b_start%253Aint=4.html
If it matters to you please read the above link, or go to
Joyonboard.@blogspot.com
There is no perfect system..but I have an idea which, if we are to keep it as a for-profit business, will help motivate insurance companies to help us stay healthy…and truly be in the healthCARE business.
Let’s make the insurance companies FULLY cover their insured customers. If they provide healthcare insurance, they must also provide disability coverage, and also death benefits. Then they have a reason to help you stay healthy. As it is, if you become disabled, you become someone else’s problem, if you die, they don’t have to cover any of your healthcare. Another thing most people don’t know is in the fine print of their insurance policy [if you are fornunate to have one], is that they can deny coverage of any treatment they feel is not necessary, or too costly..if you die, they are rid of you – hence my former suggestion].
OK, Joy…in your email you questioned whether the U.S. has the best healthcare because some other countries have longer life expectancies. In general, you will see a correlation between quality of healthcare and life expectancy, but there are other issues as well. Americans eat too much and don’t exercise enough. We have plenty of farmland to raise cattle and therefore consume a lot of red meat. Beef is more expensive in crowded island nations like Japan, so people consume more fish, which is healthier. And yes, some Americans don’t have good access to healthcare except when emergencies arise. This is a factor as well, and is the shortcoming of the current system. However, the HEALTHCARE itself is the best in the world. ACCESS to the system is better for most Americans, but not all. The point here is that it’s shortsighted to always equate healthcare quality with life expectancy. The U.S. is behind Bosnia and Herzegovina in the latter, but I doubt many people would prefer a Bosnian hospital to an American one. Although we could discuss many problems, let’s agree that the major one we face in the U.S. is ACCESS to the system for those without coverage, NOT QUALITY.
I also question your “humanitarian” argument for universal healthcare. It sounds good on the surface but is also logically flawed. Are you suggesting that people deserve healthcare whether or not they can pay for it? Wouldn’t this include those born outside of the U.S.? If so, then we should be building hospitals in Guatemala, Ethiopia, and every other country that can’t afford what we have. Notice that those who refer to healthcare as a humanitarian right don’t include those born in the developing world. I’m a caring person too, but someone has to pay for the system.
You are correct when you state that there is no perfect system. You’re incorrect, however, when you suggest that for-profit businesses have an incentive to provide less care while the government does not. EVERY government healthcare system rations care because of limited resources. The truth is that cost-cutting incentives exist no matter who runs the system, and the private sector has a better track record of dealing with this delicate balance while delivering value. If we accept your logic, then the federal government could run our grocery stores, auto repair centers, and every other type of business more effectively by extracting the greed and profit motive out of the system. They tried this in the USSR and it didn’t work. Whether Kroger or Blue Cross, a firm constantly balances the short term profit motive with the need to satisfy and retain paying customers, lest they take their business elsewhere. The customer’s ability to choose keeps the business in line. When the government runs things, customers can’t leave and must remain victims of the bureaucracy. If you doubt my analysis, just take a look at the U.S. Post Office or any DMV for that matter.
Your suggestion to “make” the insurance companies “FULLY” cover their insured customers is an interesting one. I don’t entirely agree, but you are addressing the key problem–incentives–and this type of proposal could be part of an overall solution. Of course, someone has to pay for the additional coverage. The truth is that most Americans demand (expensive) high quality care but don’t want to pay for it. They prefer to take their chances, hope for the best, and spend their money on other things. They need to be willing to pay what they can if taxpayers are to be expected to contibute.
Take another a look at my proposal. It provides ACCESS to a no-frills system for those who can’t afford (or get) coverage, while those with private insurance can OPT OUT. It requires that those without private insurance PAY FOR HALF of the total cost through a payroll tax, which creates a check-and-balance on the system and provides an INCENTIVE for those covered to get private insurance as their wages increase. The idea is to address the access issue in a realistic manner, keep the government subsidized system as small as possible, and keep the market strong. In effect, my proposal provides the subsidized, rationed, no-frills, universal system to those who don’t have insurance and claim that such a system is the solution. The rest of us would pay half of the total cost, but would otherwise be left out of it.
RONALD REAGAN SPEAKS OUT AGAINST SOCIALIZED MEDICINE & SOCIALISM!!
http://www.youtube.com/watch?v=EiyfG4WMxA0
Dr. Parness,
Great responsse to Joy’s coments. A cosistent theme I hear from the libs is what everyone is going to do for me. It comes through loud and clear with Joy’s comments. Is there anything said about the individual being accountable? Never. healthcare is not a right. End of story. When did profit become synonomous with greed? A little off the subject is govt programs in general and welfare specifically. In my opinion, it is slavery of the 20th/21st century. The liberals solution to every question, it seems, is more govt and more taxes.
Dr. Parnell, your ideas on the issue are definitly the most rational approach to the issue that I have heard so far. Your right on the fact that if we do nothing we will probably be looking at a government take over. We need to incourage the people, whom neglect their responsibilities. To want to take the responsibility on their own. Thats what like about your plan. If you do not have healthcare, you will be givin a no-frills plan that you will have to pick part of the cost in a payroll tax. This will definitly incourage some to want to shop around for a better plan. The others that will not, well those people are probably a lost cause anyways.
You definitly hit the nail on the head when you mention that people who can’nt afford healthcare manage to afford cell phones, satellite tv, 45,000 dollar cars, and everyother modern electronic device known to man. Something that I have been saying for years and its nice to finally hear it from someone else for a change. We live in a world of rights verses responsibilities. Unfortunately many of us believe that are responsibilities should be our entitlements. After all well-fare is nothing more then the contribution to irresponsible behavior.