Wednesday, December 13, 2006
Ron Wyden's health care gambit
Ezra Klein, one of the thoughtier lefty bloggers, is very excited about Ron Wyden's radical new plan for providing health insurance to the vast majority of Americans.
Here's how it would work: The Healthy Americans Act of 2007 would begin by dissolving all employer-based insurance. Instead, it would mandate that every employer who had covered his employees in 2006 convert the total they spent on insurance into salary increases creating, in one day, the single largest pay raise America has ever seen. Now, why would employers go along with that? Well, legislatively they'd have to, but, as Len Nichols explained to me, they'll also want to: Health costs are accelerating, every year costs 10 or so percent more than they ear before. By freezing the total at what employers paid in 2006, Wyden's plan would exempt them from 2007's increase.
Meanwhile, an individual mandate would be implemented, forcing every American to purchase one of the options offered by their state's newly formed Health Help Agency (HHA). The HHA's will have a menu of private insurance plans, all of which must provide coverage equal to or better than the Blue Cross Blue Shield Standard Plan used by Congress. All plans will be community rated by the state, meaning an end to adverse selection and preexisting condition problems. The only acceptable variables for price will be geography, family size, and smoking status. Subsidies will be offered up to 400 percent of the poverty line, will full coverage provided to those below 100 percent. Employers will contribute through a set equation related to business size and yearly profits. There's quite a bit more, but that's the basic outline.
It does, indeed, sound like a creative proposal, although I wonder if it will accomplish the extravagant claims already being made for it (total coverage for all Americans at a savings of almost $5 billion in the first year and more than a trillion dollars over the next decade). Wyden's web site has a great deal more information, which I may actually read in the next couple of days. I suspect when we peel the top off there will be something hideous underneath, such as crazy assumptions about the benefits of preventive care (for example).
There is one thing that I do not like about it already: It is silly to limit acceptable variables to "geography, family size and smoking status." These are all choices that people have made. Other such choices should also have an impact, such as a person's history of illegal drug use and obesity or absence thereof, both of which factors are huge drivers of cost in the system. Fat coke addicts should pay more, perhaps, than otherwise healthy smokers. Let the facts of one's medical history and known actuarial data drive pricing, at least to a greater degree than "geography, family size and smoking status." The Democrats, who claim to be all about accountability, should not object.
And here's a dirty little secret for you guys to chew on: About ten years ago, I actually contributed money to one of Ron Wyden's Congressional campaigns. I'm sure my motives weren't pure.
14 Comments:
By 
Assistant Village Idiot, at
Wed Dec 13, 10:19:00 PM:
I'm fine with the "paying for your choices," so long as it's actuarial rather than punitive. Smokers and coke users die younger. They don't cost as much more as people guess.
By 
, at
Wed Dec 13, 11:55:00 PM:
I'm curious how this works for retirees, who pay for their own health insurance. Who, exactly, is going to give me a raise so that I can pay for this?
And what of retirees without any health insurance? Or those who are unemployed?
Maybe these are addressed on the site; I'll take a look.
By SR, at
Thu Dec 14, 01:01:00 AM:
The biggest pay raise in American history will be followed next April by the biggest tax hike in
American history. Manditory personal health insurance
will be followed by the second most unenforced law in American history, after immigration laws.
He'll never be allowed to do it by Pete Stark, of course, but it would be great if HSA's continued to be available
so that people could purchase catastrophic coverage
keeping what they save for the future.
By , at
Thu Dec 14, 02:36:00 AM:
Question for Senator Wyden: Who makes the millions of illegal aliens buy insurance, hmm?
Also, the biggest salary increase in history will be simultaneous with the biggest tax windfall in history. Employer provided insurance is paid for on a pre-tax basis. The salary increase will be taxable income. At low incomes this will be offset by the subsidy program, but at high incomes there will be no subsidy -- so the entire amount of the salary increase will be realized as taxable income. In effect, the poor get subsidized insurance, and the rest get a tax increase _and_ still have to shell out for the insurance.
By , at
Thu Dec 14, 07:52:00 AM:
I will be reading this closely to see how Wyden's proposal would address preexisting conditions. I'm a cancer survivor, and if I were in the market for individual insurance I'd be uninsurable at this point (not enough years out from the diagnosis and treatment to be considered "clean" from an actuarial standpoint). I have group insurance through my employer and under the law, so long as I'm moving from group to group, I cannot be denied coverage. One of my first realizations when I was diagnosed was "I can't retire early -- I will not be able to afford insurance." I sure hope that my federal government doesn't put me into that position regardless of my employment status.
By SR, at
Thu Dec 14, 08:46:00 AM:
The difficulty in this is getting everybody to buy the insurance. However, if this hurdle can be made, then one would think insurers would offer all kinds of incentives to get the healthy uninsured to sign up
so that their premiums can be used to offset those of cancer survivors. Many if not most of the uninsured are healthy and see no reason to sign up. Many can well afford insurance, but abstain because providers and institutions just write off non-payment while raising their prices to compensate.
Using Congressional BC/BS benefits as a benchmark
reduces the problem of non-uniform state-mandated benefit packages.
I just don't see how Wyden is going to get everybody to "buy insurance, or else." Unless the "or else" is that nobody has any obligation to treat somebody without insurance.
By , at
Thu Dec 14, 12:10:00 PM:
Just food for thought (These come from the 2006 World Almanac and ar 2004 numbers):
Highest Percentages of People without health Insurance
Males – 17.2%
Hispanics – 32.7%
No High School Diploma – 29.5%
Non-citizens – 44.1%
18-34 years old – 57.3%
South -18.3%
West – 17.4%
Less than $25,000 Household income – 24.3%
$25,000 to $49,000 Household Income – 20.0%
By , at
Thu Dec 14, 01:06:00 PM:
"Also, the biggest salary increase in history will be simultaneous with the biggest tax windfall in history. Employer provided insurance is paid for on a pre-tax basis. The salary increase will be taxable income. At low incomes this will be offset by the subsidy program, but at high incomes there will be no subsidy -- so the entire amount of the salary increase will be realized as taxable income. In effect, the poor get subsidized insurance, and the rest get a tax increase _and_ still have to shell out for the insurance."
Honestly? Sounds OK to me.
By SR, at
Thu Dec 14, 03:57:00 PM:
Of course it does Phrizz. Let's just have Warren Buffett, Bill Gates, Michaels Jackson and Jordan, and the Walton family
pay for everybody's health care.
Wyden's plan has the virtue of solving the main cost driver of private medicine in this country, ie free riders.
By , at
Thu Dec 14, 05:19:00 PM:
OK, fine, perhaps I'm exhibiting dangerous socialist tendencies here - but could someone explain from an informed perspective what kinds of effects this could have on the economy? I really haven't a clue, but nothing brought up so far leads me to believe that it would have a particularly deleterious effect.
By SR, at
Thu Dec 14, 06:17:00 PM:
I'm not an economist, but I am a physician and I have occasionally stayed at a Holiday Inn. I believe the net effect on the economy as a whole would be extremely hard to predict. I think its the effect on the healthcare sector is what demands attention. Socializing the healthcare sector
would likely have the same effect it does everywhere else: ie politicized healthcare decisions, inefficient allocation of resources, and rationing based upon coercion. There will always be scarce healthcare resources. It just seems right to me for the allocation to be made by the patients(as they define the market en mass), and by the reaction to those choices by their providers.
By Dawnfire82, at
Thu Dec 14, 06:24:00 PM:
Creative, but I'll be damned if the government is going to try to force me to buy anything.
By , at
Fri Dec 15, 12:37:00 AM:
It has often been said that if people got to hold on to their income tax money before forking it over to the government, we would have lower income taxes. This plan has possibilities because it puts the wage earner in charge of how the money can be spent.
By , at
Sat Dec 23, 04:01:00 PM:
It leaves reirees who had Health coverage as part of thier retirement plan with nothing but medicare.Striping them of the other coverage. Putting Billions into the Profit Margins of thier former Employers.
The Mandatory purchase has no consumer protection.HMO's have been escalating rates 10-15% percent without cause for years now.The Wyden plan leaves only the people exposed to this. As Employers would be on a Fixed contribution. Negotiators are in fact impotent.
There is no reason to think any cost savings would be passed on."They have a duty to thier share holders to maximize profit"
The Government Subsidies would be eaten up quickly.And In The Third year when the individual takes on even more of the cost. It will be tragic.
This Plan is Based on The Heritage Foundation Scheme adopted in Massachusetts. The Heritage Foundation is funded by Insurance Agencies.
This is a Diabolical Scheme!
