Thursday, October 24, 2013

Real Health Care Reform

Anyone who enters into political discussion will sooner or later be asked "I see you don't like Xxx, but what is your proposal?" Well, since you asked, here is my alternative to ObamaCare:

 1) Any health insurance policy legal for sale in any state shall be legal for sale in every state.

 2) There shall be no difference in the tax treatment of health insurance, whether paid for by individuals or employers. (note the indifference on whether they are both deductible, or neither).

Part 1 allows people who want basic health insurance to get it from states that allow it to be sold, even if they live in states (like NY) that have practically banned the sale of health insurance to individuals.

Part 2 would end the pressure on companies to provide insurance as a benefit, and the other distortions that our current law creates. As we become more aware of the actual cost of the product there would be downward pressure on the price.

How does this solve the "uninsured crisis"? Allowing the sale of less expensive products would obviously allow more people to purchase insurance. If after a few years under this law, we find that the number of uninsured is still too large (however that is defined) we could consider issuing means-tested vouchers good only for health insurance.  Likewise decoupling health insurance from employment would make it easier for people to stay insured between jobs.  If insurance is cheaper and easier to get, then there will be fewer people who get sick before they get insured -- the "pre-existing condition" problem.

Interestingly, in order for the full benefit of competition to reach consumers, we need something like the failed healthcare.gov website, where people could go to research and buy the appropriate policy for themselves or their family. Maybe it will get fixed within the next three years, in time for a new President to use it for this plan?


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