The Vision Thing

On Thursday, some Republican members of Congress and think tank policy wonks who often advise them will be at the National Press Club to present their alternatives to ObamaCare. (Register here.) It occurs to me that what is most missing from the Republican proposals and commentary in recent times is the lack of a clear vision. Even if you can understand what they are proposing (and friends and close allies often cannot), it is almost never clear why they want to do it.

Here is the sad truth: Even though the Affordable Care Act (ObamaCare) is a Rube Goldberg contraption that no one can explain and even though its rollout has been a complete disaster and even though the delay of one provision after another makes it seem as though the entire enterprise is coming apart…

Even with all that, Barack Obama in his sleep can articulate a clearer vision for health reform than Republicans and all their think tanks combined — after spending four years thinking about it!!!

Granted, the president’s vision is often deceitful. When he says insurance companies will no longer be able to cancel your insurance after you get sick, he neglects to say that this has been federal law since the time of the Bill Clinton presidency. But even if they insist on being honest, can’t Republicans come up with a convincing message of their own?

Let’s see if we can help them out.

You may say I’m a dreamer;
But I’m not the only one.

From Priceless, let’s take four simple reforms:

  • A universal tax credit
  • Roth Health Savings Accounts
  • Medicaid as an option for everyone
  • Change of health status insurance

With these elements we will insure more people and spend less money than ObamaCare. But (and this will come as a surprise to many in the GOP) that is not a vote-inspiring vision. A real vision follows. And, come to think about it, it’s not just a vision for Republicans. Democrats may discover they like it as well.

Choice: There will be no employer or individual mandate. People will be free to choose insur­ance tailored to individual and family needs. Men will not be forced to buy coverage for maternity care. Women will not have to buy coverage for prostate cancer tests.

Fairness: To purchase private health insurance, every individual and every family will get the same help from government regardless of where they obtain the insurance — at work, in an exchange or in the marketplace. The subsidy for private health insurance will be the same:

  • Whether they work on the assembly line or whether they are the CEO;
  • Whether they work less than 30 hours a week or more;
  • Whether their workplace has fewer than 50 employees or more;
  • Whether they are in a union or not; and
  • Whether their employer provides the insurance or whether they obtain it on their own.

Simplicity: When people purchase insurance online, the exchange will not have to verify their income with the IRS, determine how many employers they work for with the Social Security Administration, check with the Labor Department to see if they have been offered affordable insurance from an employer, or check with their state Medicaid program to see if they quality. The reason: these things will no longer matter. To enroll, people can make use of EHealth and other private exchanges that have been in existence for over a decade.

Also, under the ACA almost every income number entered online will turn out to be wrong. Therefore almost every subsidy will be wrong. That means almost everyone will face a tax increase or a refund next April 15th. Under ideal reform, there will be no need for tax increases or refunds the following year.

Jobs: Unlike the Affordable Care Act, we:

  • Will not encourage employers to avoid hiring new workers;
  • Will not encourage employers to drop health coverage for their current employees or for their retirees;
  • Will not penalize employees and their employers if they work full time rather than part time;
  • Will not favor small business over large business or vice versa;
  • Will not favor non-union firms over union firms or vice versa;
  • Will not encourage outsourcing or labor saving technologies, or in other ways discourage eco­nomic recovery.

Universal Coverage: Unlike the Affordable Care Act, which will leave most of the uninsured still uninsured and which will drain safety net institutions of their funds in the process, we will commit a certain amount of money on behalf of every American.

  • Unclaimed tax credits (by people who elect to remain uninsured) will be sent to local safety net institutions to cover medical expenses the uninsured cannot pay on their own.
  • Also, everyone — regardless of income — will be able to use her tax credit to buy into Medic­aid.

Portability: Unlike the current system, we will encourage employers to buy for their employees insurance that is personal and portable, and that travels with them from job to job and in and out of the labor market.

Patient Power: People will have new opportunities to manage their own health care dollars, if they choose:

  • With a Roth Health Savings Account people will be able to manage their own small dollar expenses, including most primary care.
  • Special accounts will allow the chronically ill to manage their funds, similar to the highly popular Cash and Counseling program for the homebound disabled in many state Medicaid programs.

Real Insurance: Under the Affordable Care Act, health plans have an incentive to avoid the sick and to under-treat them if they happen to enroll — in part by omitting the best specialists and best hospitals from their networks. This is because the premium high-cost patients pay is well below the cost of their care. As an alternative:

  • Insurance should give people genuine protection against the financial consequences of devel­oping a pre-existing condition.
  • If an individual’s health deteriorates and he must subsequently switch health plans, the origi­nal plan must pay the new plan a higher premium to reflect the higher expected cost.
  • Patients with health problems, therefore, will be just as desirable to new plans as people who are healthy.
  • A vibrant market will develop, in which entrepreneurs compete to find new and better ways of treating the chronically ill.

In this new market, no insurance pool will be able to dump its most costly enrollees on another pool, with impunity — as they are currently doing with alarming frequency. Similarly, no individual will be able to game the system by remaining uninsured and then buying insurance without penalty after he gets sick.

Efficiency: No longer will the government subsidize the last dollar of health insurance, no matter how wasteful. Instead, government will subsidize the first dollars, paying for the core insurance that we want everyone to have. Additional insurance and deposits to Roth HSAs will be made with after-tax dollars and these dollars will compete on a level playing field with all other consumer spending.

  • Unlike the current system, no one will have an incentive to over-insure or under-insure.
  • Since HSA dollars will be available for other consumption without taxes or penalties, consumers who eliminate wasteful health care spending will get to use every dollar they save for other purposes.

Transition: We cannot abolish ObamaCare and start all over. We must transition from where we are now to where we want to be; and that is a process that will take several years. In the meantime, we can make two promises that are easy to keep:

  • If you and your employer like the plan you have, you can keep it.
  • If you have an individual or family policy you like (even one purchased in an exchange), you can keep it.

Comments (27)

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  1. Ken says:

    Excellent post.

  2. Bart I. says:

    If you’re not repealing guaranteed issue or 3:1 modified community rating, then a fixed-size tax credit should work well without many additional qualifiers.

    But it might be more politic to take a smaller bite, and leave the existing employer exclusion and self-employment deduction as options in place of the tax credit. These can be capped or phased down later in favor of the tax credit.

  3. Emory says:

    Reading section “Job” and “Universal Coverage”, we can figure out that this proposal does consider all aspects of healthcare.

  4. Moe V says:

    If senators and representatives don’t give benefit to their constituents, especially those who contribute (Unions, Big Corporations, etc.), how will they be elected? When the law is so straightforward it is almost impossible for Congress to impose the pork they always seek. Dr. Goodman is proposing an excellent and viable solution, yet I don’t believe Congress will pursue this reform.

    • John says:

      I think so. They probably will not negate the main policy that help them to obtain the power, even though they realize the new proposal is much better..

  5. Harry G says:

    For me the point to be highlighted is simplicity. Many are ignorant about the health care sector, especially when the reform involves every American. We cannot expect every individual to navigate through the murky waters of the healthcare industry and the storm called Obamacare. If we can come up with a simple reform that the common American can understand, it would be the best reform possible.

  6. Kenneth A. Fisher,M.D. says:

    Change the rules this will work,

  7. Alberto L says:

    “Imagine all the people…” had access to healthcare and received treatment without risking their financial stability.

  8. John says:

    Very comprehensive and insightful.

  9. Raphael P says:

    The ability to communicate is sometimes better than the ideas. Obama has an unmatched ability to persuade people. Even without giving actual solutions, he is capable of convincing the population that he has the answers; that he knows what he is doing. He has been successful thanks to his public speaking skills. But Obama’s strength is the Republican demise. The party has not been able to find someone that matches the President’s oratory or that can successfully sell an idea to the electorate. The Republicans may propose ideas with more content, more analytical and that might be more effective, but they are not persuasive enough to sell the solution to the population. While Obama continues warming Americans’ ears, with nice words and theoretical solutions, the Republicans will keep proposing valid legislation that lacks support.

  10. Roger Waters says:

    Ok, excellent bullet points and rather eloquently stated, for the background document. Now, you need a one-page issue brief.

    An we need to get this into some kind of “spin” so people can easily and readily do their “10-second elevator pitch.”

    And then PLEASE get everyone to say the same thing, over again, all the time?!?

  11. Frank T. says:

    Dr. Goodman, your proposal is utopic. You are talking about the best case scenario and supposing that everything will turn out perfectly. If you had to choose three of the goals, which ones would you choose? I would select a reform that is simple, efficient and that provides real insurance. The rest are additional things that will make things better, but that are not necessary to make a comprehensive reform. If we had a reform that is simple, efficient and that provides real insurance, we would have an amazing new healthcare system.

  12. James M. says:

    “And, come to think about it, it’s not just a vision for Republicans. Democrats may discover they like it as well.”

    I think this sort of health reform is something everyone would like. However, I am curious about what the downfalls of this policy is? No matter what policy, there is always a segment of the market who loses out.

  13. Ron says:

    I say focus on what the public is mad about with the ACA. If you like your insurance you can keep it, if you like your doctor you can keep her. If you wan your old nsurance back, encourage insurers to re-establish most of the old policy forms.

    Replace – KISS

  14. charlie bond says:

    Good morning, John,

    Well, the political football is on the tee, and health care is about to get another boot. With the bankruptcy of this country at stake and our children facing a lower standard of living because we can’t solve this health care mess, what is needed NOW is a sincere reach across the aisle in an exercise of old-fashioned statesmanship.

    In particular, Congress needs to expedite the passage of legislation that would promote the forming of Continuum of Care Organizations (COCO’s)
    aimed at redesigning the delivery of care to the 5% of the population that is driving 90% of our costs by encouraging interdisciplinary cooperation across the broad spectrum of care (physicians, hospitals, nursing homes, home health and social workers, etc.) coordinated by aggressive case management and incentivized by hefty gainsharing.

    The government should specifically assure that COCO’s will be even more unencumbered by federal and state regulation than ACO’s are presently. (One of the GOOD things that has come from the passage of the Affordable Care Act has been the lifting of the regulatory inhibitions that prevented collaboration and innovation amongst providers working together. We are currently setting up COCO’s under an ACO structure just to get the regulatory relief.) The climate for innovation should continue to be stimulated.

    Federal and state programs should offer sizable longterm gainsharing incentives so that the more the COCO saves, the larger the percentage of savings that go to the COCO. The guarantees should be baselined and extended for years to assure that the incentives are sufficiently longterm to motivate and amortize the costs of real, meaningful reorganization and streamlining of the delivery of care. (Streamlining the delivery of care is not rationing, this is cutting waste and duplication, which seem to be like basic food groups forhealth care costs. They are everywhere and the industry is getting fat on them).

    Private insurers and health plans should be strongly incentivized to join the government in offering gainsharing contracts to COCO’s so that the organizational and operational costs of the COCO’s can be amortized over all payors and so there is maximum incentive to re-design health care to lower the costs of caring for our highest utilizers, regardless of payor.

    Most importantly, patients should be allowed and encouraged to become members of COCO’s of their choice and to participate in the gainshare. Presently patients have no choice as to their assigned ACO and reap none of the rewards afforded the ACO, yet patients and their behaviors are the greatest drivers of costs and the greatest predictors of outcomes. If patients were allowed to participate and be incentivized COCO’s could devise ways to incentivize patients take care of themselves and reduce health costs (e.g. through wellness programs and rewards for following medical regimes, etc.). COCO’s could also devise ways of rewarding patients who volunteer to care of others, thereby further reducing health care costs. Presumably the market would then work and patients would choose the COCO that has the greatest gainshare incentives for patients and offer the best quality of care. COCO’s could then expand well beyond the 5% of high utilizers to become community-based, community-driven health programs. The Patient-Physician Alliance has been devising ways to encourage patient participation in collaboration with health care providers to reduce costs and improve care.

    Anyone interested in working on COCO’s as a means of grassroots reform should feel free to contact me directly. While legislation and governmental participation in the COCO movement would help speed the spread of these organizations, they can be set up without new legislation. They represent a free market, apolitical approach that might just be something we can implement in time to provide the care needed by the Baby Boomers at a price that won’t bankrupt future generations.


  15. Brian Williams. says:

    It is as true today as when King Solomon said it: Where there is no vision, the people perish.

  16. Wanda J. Jones says:

    John and Friends:

    People will look for the word “Subsidy.” They will also want some relationship between their earning power and premiums. Tax credits are “mystery meat” to many, as they haven’t ever paid taxes and do not understand the idea of tax credits that are supposed to yield cash.

    Some people are entranced with the idea of a “government plan’ as they relate that to some guarantee, and even to “free.” More and more people are looking to something labeled “private” as they see the government messing up its own plan.

    The simplest way to get out of Obamacare is something that has already been used–the waiver. Amend it to allow for waivers on request for anything that does not work. Gut the thing, then strip the framework when your program is fully implemented.

    You are going to need a powerful PowerPoint that you can take around to the offices of key Senators to get acceptance. I agree that you need a vision for this, and that people will not respond well to logic only. Here are a few:

    “Healthcare your way.”

    “Health insurance that works.”

    “Customer-led health insurance.”

    Then, I would recommend that some portion of your plan work via healthcare systems so there is a program for actual provision of care. A card with no doctor is useless.

    Even if Obamacare is not repealed, there must be a roll-back of the high deductible, rigid policy specs as they are ludicrous.

    Finally, payment methods are in a state of flux as people are fixated in the evils of FEE FOR SERVICE. We need a payment method that encourages true continuity of care for people with chronic disease and which automatically creates both a clinical and a financial audit trail. Health insurance contracts with providers can specify this.

    Thanks for pursuing this, and let’s hope the Republicans take it on the road.

    Wanda J. Jones,
    New Century Healthcare Institute
    San Francisco.

  17. Centrist says:

    John, I do appreciate your suggestions and acknowledgment that the ACA is going to be around for a while and that reasonable modifications should be implemented. I personally don’t care if improvements come from the right or the left, just that ideas be improvements.

    A couple of observations:

    “Choice: There will be no employer or individual mandate. People will be free to choose insurance tailored to individual and family needs.” ——– “Similarly, no individual will be able to game the system by remaining uninsured and then buying insurance without penalty after he gets sick.”

    This imitates the ACA mandate in that one must be covered or pay a penalty and assumes the person has money to pay the penalty along with any premiums … high or low.

    “Also, everyone — regardless of income — will be able to use her tax credit to buy into Medicaid.”

    Since the majority of Americans would opt for this option, you are in essence professing Universal Health Care in America (Medicare/Medicaid/Tri-Care) for the masses and reserving premium medicine “the best specialists and best hospitals” for those who can afford it. This is the standard model for all other industrialized nations.

    Lastly, have you put numbers to the ‘credit’? What would be the impact on government revenues and would a credit be sufficient to even buy into your new Universal Medicaid program?

    I appreciate anyone presenting solutions, but again your solutions evolve from the premise that everyone has sufficient income and can afford insurance, Roth or standard HSAs, and Health concierge services, etc. or that everyone has enough social conscience to participate in the Health Care System.

  18. Beverly Gossage says:

    Thank you for not saying, “Buy across state lines.”
    We must return health insurance to risk rated policies and encourage a movement away from employer sponsored plans. We must remove MLR or so that small carriers can compete again to broaden the players in the marketplace. I like the concept of purchasing a policy based on risk, and then buying an additional policy that allows you to change carriers and policies. You have proposed an excellent foundation. Love your talking points about what we will do that can resonate with the populace.

    • Joanne Vine says:

      What is the problem with buying across state lines. It does seem to accomplish goals that you list and also helps provide access to facilities needed for people with uncommon diseases.

  19. Jimbino says:

    What has been proposed here is NOT a healthcare plan, but an insurance plan.

    Insurance has nothing to do with health, and indeed is a hindrance because of the drain represented by red tape and profits involved in insurance, not to mention limitations in choice of docs, hospitals and drugs.

    I get what I want at Walmart and they don’t require insurance. If they did, I would probably be assigned a Walmart to shop at and everything would cost more.

    The Amish and Mennonites get health care, but they don’t participate in insurance, whether Obamacare, Medicare, Medicaid or Social Security.

    The healthcare system in Singapore, the economically freest country in the world, does not rely on insurance, but on HSAs.

    Insurance is a costly religion that I don’t care to participate in.

    • Joanne Vine says:

      Insurance means profit. Many services are effectively provided by nonprofit organizations. Medicine can me one of them. Israel has competing nonprofit health organizations. Everybody has to join but can pick which one unless you’re poor in which case the government pays

      What works in a very close knit cohesive group like Amish nd Mennonites might not work on a large scale BUT there are healthsharing groups in this country that are mainstream and that even get you out of the Obama fine (Liberty Health Sharing)

    • Joanne Vine says:

      Insurance means profit. Many services are effectively provided by nonprofit organizations. Medicine can me one of them. Israel has competing nonprofit health organizations. Everybody has to join but can pick which one unless you’re poor in which case the government pays

      What works in a very close knit cohesive group like Amish and Mennonites might not work on a large scale BUT there are healthsharing groups in this country that are mainstream and that even get you out of the Obama fine (Liberty Health Sharing)