Our Health Care Problems
Buce writes:
Underbelly: Feldstein on Health Care: Martin Feldstein offers the best possible two-paragraph summary of the health care problem:
The American health-care system suffers from three serious problems: Health-care costs are rising much faster than our incomes. More than 15 percent of the population has neither private nor public insurance. And the high cost of health are can lead to personal bankruptcy, even for families that do have health insurance.
These faults persist despite annual federal government spending of more than $700 billion for Medicare and Medicaid as well as a federal tax subsidy of more than $220 billion for the purchase of employer-provided private health insurance.
Feldstein writes:
Martin Feldstein - A Better Way to Health Reform - washingtonpost.com: Let's scrap the $220 billion annual health insurance tax subsidy, which is often used to buy the wrong kind of insurance, and use those budget dollars to provide insurance that protects American families from health costs that exceed 15 percent of their income.
Specifically, the government would give each individual or family a voucher that would permit taxpayers to buy a policy from a private insurer that would pay all allowable health costs in excess of 15 percent of the family's income. A typical American family with income of $50,000 would be eligible for a voucher worth about $3,500, the actuarial cost of a policy that would pay all of that family's health bills in excess of $7,500 a year.
The family could give this $3,500 voucher to any insurance company or health maintenance organization, including the provider of the individual's current employer-based insurance plan. Some families would choose the simple option of paying out of pocket for the care up to that 15 percent threshold. Others would want to reduce the maximum potential out-of-pocket cost to less than 15 percent of income and would pay a premium to the insurance company to expand their coverage. Some families might want to use the voucher to pay for membership in a health maintenance organization. Each option would provide a discipline on demand that would help to limit the rise in health-care costs...
There are two problems with Marty's plan. First--this "15% of family income" business: the voucher buys a policy which is a lot more costly to the insurance company if you are poor than if you are rich, and that creates yet another adverse selection weak point in the system.
Second, people are really lousy consumers of medical services when they have to spend their own nickel. Why, just this morning Anthem Blue Cross waived the copays on all flu shots. That's not something you would want to do if people were anything more than jumped-up monkeys with brains designed to figure out whether the fruit is ripe..
