In reaction to the proposed Republican repeal of the Affordable Care Act, some have asserted that the only way to provide health care coverage to the poor is via an insurance mandate and a single-payer system.
I don’t believe that’s true. There are no doubt other good solutions, but I’ll toss out an idea for a system that conservatives could love.
#1 Cut the cord between employment and insurance.
Employer-provided health insurance stifles the labor market. It leads to underemployment as workers accept jobs that don’t make the most of their skills for the sole reason that such-and-such dreadful job offers good (or even: bad) health insurance.
Employer-provided health insurance stifles competition in the insurance market, as employees receive at most two or three choices for health plans.
Most egregiously, employer-provided health insurance creates an automatic crisis anytime someone becomes unemployed: Just when you need your savings to stretch the farthest, you are suddenly left either uninsured or with ridiculously high premiums.
We should transition, not by mandate but by option, to an insurance market that is independent of one’s employer. Insurance works by pooling risk. It does not matter whether the risk is pooled via employment groups or some other system, so long as enough people purchase insurance to effectively spread the risk among themselves.
#2 Perpetual, Transferable Tax-Shielded Medical Savings
Employers and other people of good will could continue to provide medical benefits, but using an ancient and highly effective mechanism: Cash.
To that end, the government could allow the creation of medical savings accounts that are tax-protected. The portion of your wages that goes into such an account — yours or anyone else’s — is not taxed. The funds can then be used to pay for health insurance or to pay for health care expenses out of pocket. They can be used to pay for other people’s health care expenses, not just your own. If you drop dead, you can leave your account to someone else for their health care expenses.
No complicated forms would be required at tax time, other than a line on your W-2 reporting what amount of your income was not subject to tax because it was invested in a savings account. Meanwhile, as soon as you earned and deposited the cash, it would be available for you (or anyone) to use.
This system would remove both the incentive for employers to limit employee hours, and the penalty against those workers who have multiple part-time jobs. Employers who wished to offer bonuses of some nature in the form of health-savings investments could do so, but there would be no magic weekly-clock-time line dividing the insured from the uninsured.
#3 Open Pricing
Here’s something strange that happens at the doctor’s office:
Doctor: “You need this test. It will give us good information.”
Patient: “How much will that test cost? What other options would give us just as good of information, and how much would those options cost?”
Doctor: “Well, we couldn’t really say about the costs, not exactly. I think maybe this one is a little cheaper than that one? It depends on your insurance.”
So you pick a test. Then, magic: You get a bill!
It’s as if the cost was already in the computer system. Amazing!
Instead of waiting for the receptionist who doubles as the billing assistant to type in the code that makes the bill appear, and then the insurance company (if you are so lucky) to scratch through the price on the bill and specify a different price, what if we posted prices up front?
What if health care providers were limited to two pricing options: The price for paid-by-insurance and the (cheaper) price for paid-in-cash-right-now? Everyone would then have the same exact “negotiated rate.”
That is, Dr. Jones might charge $45 to look in your ears and Dr. Smith might charge $120, but both of them could load their prices on the server, done, and those would be the prices billed to everyone.
Your insurance company could then, in a legally-mandated fit of transparency, publish — before you purchased the insurance plan — the amount it will cover for any given service. Rather than hunting for an in-network doctor, you could see that Jones charges rates that your insurance company will cover in full, and Smith is going to cost you a portion out-of-pocket.
For $.99 cents you could download some cheap app that looks all this stuff up for you. For $3.99 you could get one of the pricier competing apps that also warns you about your cholesterol levels.
Three Things Still Missing
What about the poor? Nothing in this open-market, transparency-heavy scheme prevents health care assistance to the poor. Your state or federal government could allow those who qualify for subsidies to have a portion (or all) of their medical care paid for via a government-provided health-care payment card.
Not feeling governmenty? Non-profits and good citizens alike could use their own health-care savings plans to pay for the expenses of those who find themselves in a bind.
What about tort reform? Yes we need that too. But let’s put it in a different bill.
What about the part where we all die? This is the bottomless-abyss problem with healthcare expenses. A few of us will drop dead on the spot after a lifetime of pristine health, but the rest of us will constantly accrue unlimited medical needs. Each new medical innovation offers both a reprieve from suffering and a bill to go with.
No system can fix the bottomless abyss. A single-payer system must necessarily make hard decisions about what services to cover and which to deny. A free market system must do the same. What’s the advantage to a free market scheme such as the one I’ve proposed above? We have a back-up plan.
In a single-payer system, the single-payer is the last word, done. In a free market scheme like mine or any other similar system, there is always the option of appealing to your friends and family to override the judgement of your institutional superiors.
That isn’t a solution that you want as your first-line option — what you want is a system that mostly covers what people need. But given the choice between a government-run system with no effective appeal and a free-market system where appeal is never more than a fundraising-campaign away, give me a system with an emergency corrective mechanism every time.
Photo by Tyne & Wear Archives & Museums (https://www.flickr.com/photos/twm_news/9490956967/) [No restrictions], via Wikimedia Commons
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