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Where did these ideas come from? Back in 1989? These are hardly new ideas and many have already been tried. These are nothing but old chestnuts being re-warmed and have not solved the problem of escalating costs of health care or the growing number of uninsured. Let me debunk each one.
First, allow small businesses and individuals to purchase health insurance with pre-tax dollars, as large businesses do.
This has already been in force for more than a decade. Small businesses have been allowed to purchase health insurance with pre-tax dollars since the 1980s and self employed individuals have been allowed to fully deduct the cost of their health insurance since 2002. This has had very little effect on the increasing cost of health insurance or the number of uninsured in the United States.
Second, offer refundable tax credits to lower-income families and individuals, enabling them to purchase health insurance.
This has been proposed many times before but scrapped as unworkable. There is no guarantee that those who would receive this refundable tax credit would actually use it to purchase health insurance or that they would even qualify for health insurance. Also since health insurance costs are not uniform across the country and there are a vast number of different plans, this would become an administrative nightmare frought with abuse and outright fraud. The IRS even said that they could not administer such a program effectively and prevent widespread abuse. It got nowhere in congress and is an idea that sounds great in an oak paneled office but fail miserably on the street.
Third, allow the sale of health insurance across state lines.
This is an idea that I am strongly in favor of enacting. It would make it much simpler for large national insurance companies to do business as well as simplify health insurance between the states. However before interstate sales of health insurance can be done, the McCarran - Ferguson Act must be repealed. That is a relic from an earlier era before the internet and interstate highways. It was passed in 1945 and authorizes the regulation of insurance products to the individual states.
But if the McCarran - Ferguson Act is repealed and interstate sales of health insurance is allowed, then there must be a federal regulatory agency established to regulate insurance that is sold across state lines since state regulation ends at their border. In the absence of a strong federal regulatory agency, there would be a wild west envoronment involving insurance sales that could easily take advantage of consumers. This is an idea that has been proposed many times in congress since the 1980s. But it has died because "small government" Republicans have successfully blocked it.
Unless and until the Mccarran - Ferguson Act is repealed and a strong federal regulatory agency is establlished to regulate interstate sales of insurance, this will not happen. Perhaps when the Republican party wakes up and realizes that a federal regulatory agency is needed for insurance and that much has changed since 1945, this wil get done.
Fourth, allow Small Business Health Plans (SBHPs), formerly called Association Health Plans, to purchase health insurance for their members or self-insure.
This idea was a cornerstone of Hillary Clinton's health care reform plan from twenty years ago and has largely been adopted across the country. I was a member and on the speakers bureau of the largest small business health insurance purchasing cooperative in the country back in 1993. That was the model for this idea in the Clinton health care reform plan. That organization (which still exists today) is the Council of Smaller Enterprises (COSE) of the Greater Cleveland Growth ssociaiton. It has more than 15,000 member businesses ranging from one man operations to companies with up to 250 employees. They started their health insurance program with a partnership with Blue Cross of Ohio (now Medical Mutual of Ohio) in 1986 and it has been going strong ever since then.
There are also many other health insurance purchasing cooperatives in the region and across the country. They are offered through local Chambers of Commerce, business associaitons and progessional organizations, even the local Better Business Bureaus. But health insurance is still expensive and people still have to be underwritten. Besides the cost of health insurance is the dues for the associaiton since the business must be a member. COSE's membership dues in 1993 were $430 per year which was not much for a company employing more than 100 workers, but a stiff sum for one who was self employed.
Fifth, expand Health Savings Accounts (HSAs) and consumer driven health care plans (CDHC) by allowing higher deductibles and HSA contributions.
These plans were expanded in 2003 and have spread, becoming popular with the more affluent. But CDHCs and HSAs are not for everyone. If one cannot afford to fund the savings portion, then that person does not belong in one of those plans since the high deductible would discourage seeking needed medical care. These plans are good for those who can fund the savings portion and I have had my personal health insurance through these plans since 2004.
However these types of health insurance have reached as far as they can go in today's society. Working people with lower incomes and little disposable income cannot afford to fund the savings portion and find the high deductibles a deterrant to getting medical care. Many companies that moved to these plans ten years ago have reverted back to the older plans with lower deductibles because of employee resistance to those higher deductibles. I do not see much further expansion of these type of health insurance plans beyond the affluent.
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.
If Texas is a shining example of tort reform lowering health care costs and helping insure more people, then this is a very bad idea. Since Texas has adopted tort reform, health insurance and health care costs have continued to increase and their number of uninsured has also increased. In fact Texas has the highest percentage of their population without health insurance in the nation. Only California has more people uninsured, but then California has almost twice as many people as Texas.
This is an old chestnut that still tastes bitter even warmed up. Actually the cost of medical malpractice insurance has come down in many parts of the country. That reason is because so many doctors have joined larger practice groups affiliated with hospital systems where all their business operations are controlled by one central office and their malpractice insurance is a blanket policy covering all physicians and medical personnel practicing in the hospital setting.
If the medical community did a much better job of policing itself and getting rid of incompetent and impaired doctors, medical mistakes that are the cause of malpractice judgements can be significantly reduced. But when a doctor has to work 12 hours straight or be on call 24 hours, they get exhausted and fatigued where they are more prone to make mistakes. if i am going to have surgery, I want those doctors well rested, bright eyed and alert; not exhausted after a six hour open heart surgery with compllications.
According to someone with a large medical malpractice law firm, it costs the law firm more than $100,000 to take a medical malpractice lawsuit to court. That is money that the law firm has to spend before they make a penny, so there is no such thing as a "frivilous" medical malpractice lawsuit. Cases that lack significant merit are often thrown out of court and judges do not look kindly on ambulance chasing lawyers.
Tort reform will have very little effect on the cost of health care or health insurance.
Covering Preexisting Conditions
The most effective way to cover pre-existing conditions is to require all health insurance companies to cover pre-existing conditions and prohibit cherry picking and rating people based on health conditions. Another key is a mandate requiring everyone to get insured or pay a stiff penalty. That is what is written into the ACA.
This was done as part of the health care reform act passed in Massachusetts in 2006 as their governor Mitt Romney trumpeted as a "model for the nation". Now seven years after that has been in effect, it has worked very well. Although health insurance premiums are still high in Massachusetts, people are widely satisfied with their health care reform. Massachusetts has the lowest percentage of their population uninsured among the fifty states with less than 5% of their population without health insurance.
This shows that the model of health insurance exchanges, guranteed acceptance and coverage of all pre-existing conditions along with a strong individual mandate does work. What also works is when the state initiates a widespread communication effort to get and encourage people to enroll through the exchanges. Too state it simply, when the state cooperates, Obamacare will work.
Reforming Medicare and Medicaid
This is the subject of another topic in itself. But the major funding problem with Medicare can be solved quite simply if congress can summon up the courage to act. That problem is that the Medicare tax rate, the amount we pay to fund Medicare while we are working, has been stuck at the same percentage of income since 1986. That rate is 1.45% of income, matched by the employer. Now if health care costs had increased at the same rate as incomes since 1986, there would be no talk of Medicare becoming insolvent. But the fact is that health care costs have increased three times faster than incomes since 1986 and the Medicare tax rate is not enough and has to be increased. In addition it must also be indexed to the cost of health care so it keeps Medicare solvent.
Unlike social security, the Medicare tax is not capped at about $110,000 in income. But the Medicare tax rate should be applied on incomes up to $1M at least. Of course this would cause a lot of people to squawk like stuck pigs because this would be a massive tax increase. But it is needed to keep Medicare solvent into the 21st century and keep the promise of Medicare alive.
Younger people would have a legitimate gripe since they would be bearing the brunt of this tax hike. That is why the mest solution would be to expand Medicare to cover every American from cradle to grave and completely revamp its funding; linking the rate of taxation to the cost of health care. This way everyone would have some 'skin in the game" and put the government in the role of controlling the cost of health care.
Again this is the subject of another topic but that is what would really fix the system.