Comments on: Mark Pauly on the Candidates’ Health Plans http://healthblog.ncpa.org/mark-pauley-on-the-candidates%e2%80%99-health-plans/ Health Care Policy and Reform Insights | NCPA Thu, 24 May 2012 19:50:08 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Bart http://healthblog.ncpa.org/mark-pauley-on-the-candidates%e2%80%99-health-plans/comment-page-1/#comment-39582 Bart Sat, 01 Nov 2008 18:23:39 +0000 http://www.john-goodman-blog.com/?p=904#comment-39582 I should add that ignoring my point above, e.g. extending a tax break to low-risk individuals with individual coverage, would create precisely the situation that Pauly describes. It would induce low-risk individuals to drop existing employer-based group coverage and switch to low-cost individual plans, thus crowding out the group plans. On the other hand, it should be possible to extend a tax credit for group coverage only. The tax break would allow low-risk individuals to stay with the group plans as they do now, the difference being that the group plan could now be portable. Pauly is also concerned with income levels and means-testing, but these might best be handled separately. Conflating social safety net issues with health policy will only result in a massive program with perverse incentives. I should add that ignoring my point above, e.g. extending a tax break to low-risk individuals with individual coverage, would create precisely the situation that Pauly describes. It would induce low-risk individuals to drop existing employer-based group coverage and switch to low-cost individual plans, thus crowding out the group plans.

On the other hand, it should be possible to extend a tax credit for group coverage only. The tax break would allow low-risk individuals to stay with the group plans as they do now, the difference being that the group plan could now be portable.

Pauly is also concerned with income levels and means-testing, but these might best be handled separately. Conflating social safety net issues with health policy will only result in a massive program with perverse incentives.

]]> By: Bart http://healthblog.ncpa.org/mark-pauley-on-the-candidates%e2%80%99-health-plans/comment-page-1/#comment-39580 Bart Sat, 01 Nov 2008 06:43:48 +0000 http://www.john-goodman-blog.com/?p=904#comment-39580 When Mark Pauly characterizes the community rating approach to pooling risk as 'inefficient' he assumes that it is the low-risk consumer who pays the 'excise tax' to finance higher risks. But in reality, the employer exemption approximately offsets this additional cost for low-risk individuals, while acting as a true subsidy for those at higher risk. In other words, for low-risk individuals the choice between pre-tax group coverage and after-tax individual coverage is roughly a wash. Therefore tax equity cannot be used as a justification for extending the employment tax break to low-risk individuals purchasing individual insurance. The only way to way to extend a tax break for individual coverage in parity with the existing employer-based system is to offer a tax credit only against the portion of the insurance premium in excess of the preferred rate. When Mark Pauly characterizes the community rating approach to pooling risk as ‘inefficient’ he assumes that it is the low-risk consumer who pays the ‘excise tax’ to finance higher risks. But in reality, the employer exemption approximately offsets this additional cost for low-risk individuals, while acting as a true subsidy for those at higher risk.

In other words, for low-risk individuals the choice between pre-tax group coverage and after-tax individual coverage is roughly a wash. Therefore tax equity cannot be used as a justification for extending the employment tax break to low-risk individuals purchasing individual insurance.

The only way to way to extend a tax break for individual coverage in parity with the existing employer-based system is to offer a tax credit only against the portion of the insurance premium in excess of the preferred rate.

]]> By: Larry http://healthblog.ncpa.org/mark-pauley-on-the-candidates%e2%80%99-health-plans/comment-page-1/#comment-39547 Larry Wed, 29 Oct 2008 19:11:34 +0000 http://www.john-goodman-blog.com/?p=904#comment-39547 What Mark Pauly did not say is that in the McCain plan there is an integrated approach -- with the tax subsidy being the same for employer-provided insurance and individual purchase, while for Obama there is no such integration. So Obama's approach is very unstable. Also Obama's plan is not really a plan at all. It is a wish list of good things with no mechanism to achieve them and no funding source to pay for them. So when the modeler's try to estimate the Obama plan and they make different assumptions (to fill in the blanks Obama did not fill in) they get wildly different answers. In particular, the ten year cost estimates of the Obama plan range from $1 trillion to $6 trillion. What Mark Pauly did not say is that in the McCain plan there is an integrated approach — with the tax subsidy being the same for employer-provided insurance and individual purchase, while for Obama there is no such integration. So Obama’s approach is very unstable.

Also Obama’s plan is not really a plan at all. It is a wish list of good things with no mechanism to achieve them and no funding source to pay for them.

So when the modeler’s try to estimate the Obama plan and they make different assumptions (to fill in the blanks Obama did not fill in) they get wildly different answers.

In particular, the ten year cost estimates of the Obama plan range from $1 trillion to $6 trillion.

]]> By: Joe S. http://healthblog.ncpa.org/mark-pauley-on-the-candidates%e2%80%99-health-plans/comment-page-1/#comment-39546 Joe S. Wed, 29 Oct 2008 19:05:13 +0000 http://www.john-goodman-blog.com/?p=904#comment-39546 Why do we need a hybrid? I like the Goodman/Pauly proposal that was in Health Affairs and is listed as a CDHC Classic at the NCPA's CDHC site. Having devised the ideal plan, why water it down? Why do we need a hybrid? I like the Goodman/Pauly proposal that was in Health Affairs and is listed as a CDHC Classic at the NCPA’s CDHC site.

Having devised the ideal plan, why water it down?

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