Ramesh Ponnuru and Yuval Levin proposed a Republican health reform plan in National Review. This led to petty carping by Matt Yglesias, a response by Levin, clarification by Ben Domenech and more petty carping by Ezra Klein.
Here’s the problem. The Republican reformers are talking mechanics and not principles. They propose a list of changes they would like to make, but are unclear on why they would like to make them. Therefore, they open the door to the critics — who are more than happy to divert everyone’s attention away from the huge problems with ObamaCare.
There are two central questions to be asked about any health care system:
- What help will people get from government to make insurance affordable?
- Will the insurance be portable and, if not, what will be done about the pre-existing condition problem?
Answers below the fold.
The help ObamaCare offers is arbitrary, unfair, and in some case extremely regressive. People at the same income level will get subsidies that can differ by $10,000 a year or more. Far from making health insurance affordable for everyone, the ObamaCare mandate is about to impose a huge financial burden on low-wage workers and their employers without any additional help at all.
An alternative approach was proposed by presidential candidate John McCain. The legislative version was the Coburn/Burr/Ryan/Nunes bill. In contrast to ObamaCare, this proposal would treat everyone the same. Whether you are Bill Gates or a filling station attendant, whether you work for a small company or a large one, whether you work full time or part time, whether you get insurance at work, in an exchange or in the marketplace — the McCain plan promised the same amount of federal government help in the form of a fixed sum, refundable tax credit.
If we replace the current system of tax subsidies and make certain tax preferences conditional on proof of health insurance, I believe we can offer every adult individual a tax subsidy of $2,500 and every family of four a subsidy of $8,000 without any increase in the size of government. This would subsidize the core insurance that we want everyone to have, leaving them free to purchase additional insurance on their own.
BTW, no one with any sense would turn this offer down. What family would say “no” to $8,000 of free health insurance? But if they did, the $8,000 should be sent to a local safety net institution in case the family incurs medical expenses they cannot pay for from their own resources. (This is universal coverage folks — without mandates!)
On the second question, portable health insurance should be encouraged, but not required. Subsidizing all insurance the same way, regardless of where it is purchased, would encourage individually owned, personal and portable insurance. But to anticipate changes in insurance plans, there should be change of health status insurance, effectively allowing individuals to insure against the future cost of experiencing a pre-existing condition.
With narrow networks and managed care, I believe health insurers could offer comprehensive coverage for these amounts — especially if combined with Health Savings Accounts. People could add to their tax credit with after-tax dollars and have more options if they chose to do so.