My Plan for Health Care Reform
ByAs the election of Scott Brown to the late “Ted Kennedy’s seat” last week has temporarily muted the winds of socialized medicine, it is time for the Republican party to boldly proclaim their reasoned alternatives within the current health care debate. Despite the rhetoric regarding the “party of no”, alternatives to the Democrat’s disastrous plan have been proposed over the course of the past year. As the Heritage Foundation noted, three alternatives were brought to the floor:
- The Patients Choice Act of 2009
- The Improving Health Care for All Americans Act
- The Empower Patients First Act
While the above proposals differ, the basic premise is rooted in reforming the tax inequalities of the current system. For example, there are an unlimited number of tax breaks that exist if you were to purchase insurance through your employer. This is not the case should you purchase insurance on your own. The Republican alternatives seek to create universal tax credits rather than further the inequalities of the current system.
It is my belief that any proposal must be rooted in the sound principles of limited government and the private market. In so doing, we only enhance our choices and maximize our benefits from a multitude of options without the restrictions that government naturally imposes on its citizens. The merits of these principles are evident from President Lincoln’s domestic agenda and how it relates to three successful pieces of legislation; the Homestead Act, the Land-Grant Colleges Act, and the Pacific Railway Act. As William J. Stuntz writes in the April 2009 pages of the Weekly Standard, these laws worked as:
Their success did not depend on complex judgments made by members of Congress or government regulators. The statutes in question were meant to confer opportunities, not to solve problems—yet they offer a terrific model for problem-solving government. Notice who did the hard work: not members of Congress, not Lincoln’s omnicompetent cabinet, and not the president himself. Rather, the necessary elbow grease was supplied by the private citizens whose prospects Lincoln aimed to improve.
Therefore, under the proven principles of limited government and private enterprise, and for the cause of the environmentally conscious (2 pages vs. 2074), I wish to propose my guideline plans for health care reform, as outlined below.
The first aspect of my plan would abolish Medicare and Medicaid and replace it with a Direct Insurance Purchase Program (DIPP). The benefits of Medicare and Medicaid do not warrant the amount of tax payer money wasted to keep them afloat. A more cost effective approach would be for the Federal government to directly purchase insurance from the private market for those who truly cannot afford to pay for their own health insurance. As the bills recently passed by both the House and Senate place the costs of “reform” over $1.2 trillion, a DIPP will cost roughly $230 billion per year (assuming the average annual premium for an individual is $5,000 and the number of uninsured is 46 million). Given the governments penchant for cost underestimation, DIPP costs fall well below current proposals, including the OMB’s 2010 estimated spend of $735 billion on both Medicare and Medicaid. It will also ensure limited government involvement, and allow the private sector to provide the product mix that best maximizes the benefits in relation to their costs.
The second aspect has already been given much print and must be a necessary component of any proposal. The ability of individuals to purchase insurance across state lines opens up the market to competition, provides more insurance purchase options, enhances the flexibility to alter one’s choices based on need, and most surely leads to a reduction of costs.
The third component of my plan is a hybrid between a Flexible Spending Account (FSA) and an IRA. Today, our laws limit our tax exempt FSA contribution, by an individual, to $3,000 per year, to be spend on approved health related costs. Should we not exhaust all of the contributed amount, the Federal Government will take the balance for itself. My plan seeks to create a Health Spending Account (HSA) that (1) allows an annual tax exempt contribution of $10,000 per year for an individual, (2) allows year on year rollovers on any year end remaining balances, (3) allows for the investment of these funds in low risk instruments such as CD’s and money markets, (4) allows for supplemental retirement withdrawals above the age of 65 on a pre-defined amount, and (5) allows beneficiaries to rollover unused balances into their own HSA’s, tax exempt of course. This vehicle places the burden of health care on the individual, promotes freedom of choice, encourages savings for unexpected health bills, removes the current tax inequalities, and limits government intrusion.
It is expected that opposition to my plan will be planted in arguments of lost government revenue—lost revenue that can only ensure that the people’s money is less inclined to be used for wasteful spending, an unnecessary bureaucracy, bribes, and fraud. Further, it places ownership of the people’s money in the hands of the people. Who, other than the people, are best suited to manage their own private property?
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1 Comments
January 28th, 2010 at 8:36 am
The problems can be boiled down into two basic challenges. The first this that Healthcare is too expensive and the second is that not enough people can access the healthcare system.
I believe the reason healthcare is expensive is that we Americans are not good consumers of healthcare. We consume products and services without examining the value. This is because we often never see the price, and we are not using our own dollars to pay the bill. If we are able to see the price and have alternatives for the purchases we will become better consumers and the price for healthcare will decrease quickly and dramatically.
As an example (real life story, by the way), a Doctor informs a patient that an MRI is needed, and sets up an appointment at the hospital. The patient asks how much that costs. The doctor replies, “I don’t know. Insurance will pay for it anyway.” The patient contacted the hospital to find the test will be over $2,000. He then called a Diagnostic Imaging facility and got a price of just over $200 for the same test using the same equipment with equally qualified technicians.
The high cost of Healthcare is a result of TOO MUCH INSURANCE, not too little. With more people covered and spending money that is not theirs the problem will get worse, not better.
I would welcome a system that would allow individuals and families to purchase catastrophic health insurance where they would be covered after a very large deductable (say, $10,000 for individuals, $25,000 for families) and Heath Savings Accounts where consumers can make good choices on how those dollars are spent. The insurance portion would be less expensive, and the remainder of what is now spent on coverage could be directly moved into the HSA’s.
Of course, there would be a portion that may be paid out of pocket after an HSA is depleted and the Catastrophic Coverage begins. Families will need to take responsibility for this gap just as they would if their car broke down or some other unexpected expense popped up.
As a solution to the issue of not enough Americans having access to the health system, the Federal Government could issue Health Expense cards to families and individuals based on the previous year’s 1040’s. We can use the same system that has been used for the tax rebate. These families receiving the cards will be able to buy the Catastrophic Insurance and Health Services. This would replace Medicare and Medicaid, of course.
No system is perfect, but this is a simple solution that would address the major problems with healthcare quickly and efficiently.
Scott Parrish