Jasper Smith

Commentary on politics, economics, culture and sports.

Bush’s health insurance proposal

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One of the objections being raised against the president’s plan is that the tax standard tax break proposed ($7,500 — individual; $15,000 — family) wouldn’t really do much to help folks out with the purchase of health insurance, because health insurance is so expensive, and because (at least based on the average person’s experience choosing providers from among those offered by his employer) there’s so little choice. But this is precisely what’s so wrong about our current system, and what the Bush plan, albeit in a most tepid and inadequate manner, tries to address.

When you go to buy life insurance there are typically dozens of possible plans you can buy, with a significant array of features and price ranges. But most of us only have one or two (or at most three or four) choices when it comes to health insurance. If none of those offered by our employer fits the bill, well, then hard cheese. This system simply doesn’t make sense, policy-wise. We’d be far better off if a) everybody were insured and b) everybody had on their consumer’s hat when it came time to deciding which plan makes sense.

Thing is, even a switch to single payer (which I would argue would be a net improvement over our current system) would not get rid of the need for cost controls. All single payer countries, just like the non-single payer USA, face bigtime challenges when it comes to controlling costs. Because the USA doesn’t have a top-down system, the only way to get some cost control into the picture is to shift to a system where we’re not all playing with other people’s money when it comes to our healthcare decisions. Now, the line I always hear in such discussions is:

But I don’t want to worry about making decisions when I need healthcare, or when someone in my family does!”

I couldn’t agree more — nobody wants people to be stressed out when they’re ill.

But that doesn’t mean people ought not to be asked to make decisions before they’re ill, i.e., when they’re deciding which plan to purchase. People should be asked to think about such questions as: How much of a deductible am I comfortable with? Do I really need a private room if I go to the hospital? How burdensome would it be to pay out of pocket for my own prescriptions, or for routine checkups? Do I need my policy to cover dental care? etc.

If we could combine this sort of approach with a few needed reforms* we’d have the best of both worlds: Euro-style universality and security with American-style access, speed and choice.

*1. a “nationalized” market for health insurance with nationwide standards. 2. mandatory community rating. 3. government reinsurance for catastrophic costs or those with pre-existing conditions. 4. mandatory universal coverage with subsidies to the less affluent. 5. portability requirements for all policies to gradually sever the link between employment and insurance.

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Written by Jasper

January 24, 2007 at 10:22 am

Posted in Economics, Policy

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