Escalating health care costs call for serious health care reform, but in the case of the new federal law, political ideology, politics, bargaining and bribery have resulted in malignant disregard of the U.S. Constitution. At its heart, Obamacare is antithetical to American ideals—and it will only deepen the quagmire of systemic incompetence inherent in government programs.
What the nation needs instead is balanced, studied, incremental reform that overcomes political obstructions and recognizes areas requiring further innovation and analysis before implementation. Repeal of Obamacare may become politically possible in the coming months, and if so, we should be prepared with solutions for true reform of the system.
Repeal, Then Real Reform
Adopting the following six general reforms at the federal and state levels would improve health care, cut costs for those with health insurance, and reduce the number of uninsured.
First, allow small businesses and individuals to purchase health insurance with pre-tax dollars, as large businesses do. As Rep. Paul Ryan (R-WI) has pointed out, “The tax exclusion for employer-provided health coverage subsidizes health insurance instead of health care, hides the true cost of health care, and favors the wealthy at the expense of the self-employed, the unemployed, and small businesses.”
Second, offer refundable tax credits to lower-income families and individuals, enabling them to purchase health insurance.
Third, allow the sale of health insurance across state lines. That would provide competition against statewide insurance oligopolies and decrease insurance premiums in many states. The current restrictions in nearly all states violate the U.S. Constitution, which states, “No preference shall be given to any regulation of commerce or revenue to the port of one state over those of another.” States would still regulate insurance companies in such areas as procedure and solvency.
Fourth, allow Small Business Health Plans (SBHPs), formerly called Association Health Plans, to purchase health insurance for their members or self-insure. Federal law allows such plans for large companies and labor unions, but the SBHP bill failed in the U.S. Senate.
Fifth, expand Health Savings Accounts (HSAs) and consumer driven health care plans (CDHC) by allowing higher deductibles and HSA contributions. Eliminate “Explanation of Benefits” for routine care. Expansion of CDHC will reinforce each of the reforms recommended above. HSAs control costs and are popular across the entire economic spectrum.
Sixth, apply true medical liability reform, which is opposed primarily by plaintiffs’ attorney organizations and the politicians they support. We’ve already seen the benefits of these reforms in states such as Texas.
Covering Preexisting Conditions
Besides these general reforms, some additional specific steps should be considered.
Insuring people with preexisting conditions or chronic illnesses is urgent and complex, but optimal solutions are within reach. John Cochrane of the University of Chicago suggests employers purchase insurance in two parts. One would cover expenses for medical care incurred during employment and cease upon termination of employment. The other portion would be portable and guarantee insurability after termination of employment.
Also showing promise are adequately funded state high-risk pools with better standardization between states and enhanced by HSAs and other CDHC plans, special HSAs for chronic illnesses, and special needs insurance.
Reforming Medicare and Medicaid
Medicare and Medicaid require serious reform. Medicare is popular but unsustainable. In 2008 the Social Security and Medicare Trustees estimated Medicare’s unfunded liability was $95 trillion and will consume more than 20 percent of income tax revenues by 2020.
Privatization and encouragement of HSAs would create more cost efficiency, and Health Insurance Retirement Accounts would allow workers to set aside funds to purchase insurance after retirement, as public workers do. A 4 percent-of-salary contribution to these accounts (split between employer and employee) would put the mid-century cost of Medicare relative to GDP about where it is today.
As for the failure of Medicaid, which causes overflowing emergency rooms, several states have pilot studies using managed care and CDHC plans. These should be encouraged, and the payment process must be modified.
Such a health care reform agenda, properly balancing what government and the private sector each do best, with appropriately timed implementation, could replace the folly of Obamacare with reason and resolve.
Robert F. Hamilton ([email protected]) is a retired vascular and general surgeon in Alton, Illinois.
