My Ideal, Pipe Dream Healthcare Plan

Sterling Miller
4/3/2010

As president Obama finally signed the final piece of the health care legislation, this week I thought it would be a good time to outline what my ideal health care reform package would have been if I were a dictator. Almost all of these ideas I heard from other sources, and none of them are original with me. Many of them are included in the law which the president signed. Others are from Republicans or other Democrats.

Regulatory Reforms

Regulations must be introduced to prevent insurance companies from taking advantage of consumers. The practices that would be banned would be:
· Kicking people off of their plan or unreasonably increasing their rates because they get sick
· Placing lifetime or annual caps on the amount of money that is paid out to an individual
· Denying someone coverage or discriminating excessively in price because of a preexisting condition

These practices are unfair and do not constitute true insurance. Under the current system, however, companies have no choice but to resort to them. This is because not doing so would cause there rates to skyrocket because only sick people would buy insurance from them, putting them at a competitive disadvantage. Therefore, the government must step in and provide regulations, putting everyone on a level playing field and putting an end to rewarding bad behavior.

Universal Coverage

It is an oft-quoted fact that the United States is the only developed country which does not guarantee health insurance for all. We are the richest country in the world and yet there are about 47 million people in this country without health insurance. To change this, I would propose that Medicaid be expanded to cover more people that currently do not qualify, but still cannot afford insurance. Additionally, subsidies should be provided according to a sliding scale, so that there is a gradual shift from complete government coverage to none. These subsidies would then be used to buy private insurance. Furthermore I would place a tax on companies that do not provide health coverage to their employees, in order to remove the economic disincentive from providing coverage in most cases. If employers still choose not to cover their employees the revenue from the tax will help defray the cost of covering the uninsured. There would also be an individual mandate, which would require everyone to buy health insurance, or face a significant fine. This is reasonable, since sufficient subsidies would be provided so that insurance would be affordable. And it would also be necessary to keep individuals from gaming the system, and only buying insurance when they get sick, because of the aforementioned prohibition on discrimination on the basis of preexisting condition, under “regulatory reforms.” Finally, the quota of doctors in the system would have to be increased to account for the new patients entering the system.

Reducing Costs

One way to reduce costs of insurance is to increase competition in the health insurance markets. Although there are 1300 health insurance companies in the country, there are effectively local monopolies in many areas for two reasons: One is that there is a special antitrust exemption for health insurance companies, allowing these monopolies to form. Furthermore, it is illegal to buy health insurance from another state from where one lives. I would propose to eliminate the antitrust exemption and allow buying insurance across state lines. Doing these two things would dramatically increase competition, thereby reducing insurance premiums.

However the cost of health care itself, apart from insurance, is skyrocketing and must be brought under control. One thing that contributes to high costs is medical malpractice and the defensive medicine that ensues, with doctors spending extra money to avoid lawsuits. To address this I would place a system of caps limiting the amount of money that could be awarded in a medical malpractice suit. There would be different caps for different types of injuries, with a high overall cap. Additionally, if a judge determined that a lawsuit was totally frivolous he/she would be able to require that the litigant pay the legal fees of the defendant. Prescription drugs are extremely expensive in this country so I would decrease the amount of time of a patent, and allow importation from Canada, where drugs are much cheaper. Also I would remove the tax exemption of the most expensive, employer-provided insurance plans known as “Cadillac plans”. These plans tend to isolate the person completely from medical costs, because virtually everything is paid for. Discouraging these plans by removing their tax exemption would help reduce costs because the decision-maker would more often be paying something in the way of copayments, and would also have some incentive to reduce premiums. In addition, I would look to root out waste and fraud in Medicare and Medicaid by increasing accountability measures and stepping up enforcement of fraud.

Note

All of the regulatory reforms I list below are in the bill, as is everything I list under universal coverage, with the exception of increasing the number of doctors, which will likely have to be addressed separately. Of the things I mentioned for cost containment only the parts about fraud and waste in Medicare and Medicaid, along with decreasing the time for a patent, and the “Cadillac tax” are in the new law.