2008-05-18

"How to cure America’s health system"

From the FT:
In US public policy, all roads lead to healthcare. Remorseless pressure on public spending? Blame Medicare. Economic insecurity? Fear of losing health benefits is a chief cause. Stagnant wages and worsening inequality? Look to the cost of employer-provided insurance. This failing system is a national scandal not just in its own right, but because of its proliferating fiscal, economic and political implications.

For many workers without employer-provided insurance, the cost of cover is now prohibitive. The average cost for a family is $12,000 (€7,700, £6,100) a year (roughly a quarter of median household income before tax) and rising handsomely in real terms. If you have cover provided by your employer, losing your job means losing your insurance. The unluckiest – especially those with a dreaded “pre-existing condition” – may then face ruin. This vastly amplifies the anxieties colouring the election and driving the US towards an increasingly strident anti-business, anti-trade outlook.

Even those with employer-provided insurance and no fear of losing it are unhappy, because the cost is eating up their wages. It is so high and rising so fast that many workers can expect pay rises or continued coverage, but not both. If you add the cost of insurance to wages, the pay of low- and middle-income workers has not in fact been stagnant. Concerns about living standards and widening inequality are linked to health policy.
...
[Ezekiel Emanuel] points to employer-provided insurance as a critical defect in the US system. Inequities, inefficiencies and avoidable insecurity all flow from this model, which itself is a result of the $200bn tax break lavished on employers. In this he agrees with Senator John McCain who wants to give everybody tax relief for health insurance, regardless of who buys it. Senators Hillary Clinton and Barack Obama rely on employer-provided insurance and suggest ways of compelling or encouraging it.

Mr Emanuel also wants truly universal coverage. Here he parts with all three presidential candidates. Mr McCain’s plan is feeble: a subsidy to the low-paid (in the form of a refundable tax credit), but no clear solution to the pervasive problem of uninsurable “bad risks”. Mrs Clinton’s subsidies-plus-mandate is better, but would fall short of universal coverage (witness Massachusetts, which has tried a variant of her scheme); Mr Obama’s subsidies-without-mandate has the same defect, only more so.

Mr Emanuel proposes a universal healthcare voucher, entitling every citizen to privately-provided insurance, with standard benefits equal to those enjoyed by members of Congress. Insurers would be forbidden to deny coverage to any citizen, regardless of pre-existing conditions. They would be reimbursed by the government with a risk-adjusted premium for every enrolee – taking account of age, sex, pre-existing conditions and other factors using a formula to be determined by a new National Health Board. The system would start by covering the uninsured and those covered by their employers; in due course it would absorb Medicaid and Medicare.

This is not a single-payer plan: competition among insurers and health plans would be crucial to its success. But competition would revolve not around denying coverage by excluding bad risks, but around providing good results. To that end, companies would have to report detailed information on their performance and quality of service.

This is not a new idea. France’s mostly excellent system has similarities. But the presentation of the case has never been so concise or clear. Why then will it get nowhere? Because Mr Emanuel wants his scheme to be financed through a value added tax of 10 per cent, dedicated exclusively to the purpose. This instantly consigns the idea to the realm of the politically impossible...
This is the first I've heard of this proposal. I find it quite interesting and would like to see informed reactions to it. Emanuel's proposal immediately calls to mind similar proposals for implementing school vouchers while ensuring the universal availability of publicly funded education. One concern that occurs to me is how regulatory capture of the National Health Board—charged with setting reimbursement rates to insurers under the plan—by the insurance industry would be avoided. This proposal has the advantage of clearly indicating how cost savings would be achieved, which remains uncertain under the other plans on offer (including Obama's, which I tend to favor).

1 Comments:

Blogger rebecca said...

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21 September, 2008 23:05  

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