the ACA will put millions of workers in the economically extreme situation of having zero short-term financial reward (or less) to working full-time rather than part-time.
In economics jargon, this means the ACA creates marginal tax rates on labor income that exceed 100 percent.
The SNEP solution might be as follows:
1. Re-orient health financing policy toward catastrophic health insurance and health savings accounts. Create a national standard catastrophic health insurance plan that acts like true insurance and is reasonably affordable.
2. Repeal the ACA.
3. For non-elderly households with able-bodied adults, replace Medicaid and other means-tested programs with the universal benefit or flex-benefit.
4. For a household without health insurance who receives the flex-benefits, automatically allocate an amount of flexdollars toward health insurance. Perhaps the first $1500 per person in a household would go toward a combination of health insurance (which could be the national standard catastrophic plan) and a health savings account.
5. Close to half of current Medicaid spending is on the elderly and the disabled. I do not think that the flex-benefit system deals with those groups. At this point, I do not see a better approach than Medicaid in those cases.
This would create something like universal health insurance coverage, but with an emphasis on real insurance rather than Medicaid or pre-paid health plans. It also would get rid of the problem of high marginal tax rates. Thus, it would be better than the ACA in both dimensions–there would be fewer households without health insurance and fewer households facing strong disincentives to work.
I like this a lot, but I would prefer three additions, and an open question.
1. Transparent menu pricing of every non-catastrophic medical procedure, produce, and service. None of the usual budgeting nonsense, and obscuring of mandatory cross-subsidies. We’ve all heard the horror stories about the $20 tylenols. Brill’s piece in Time is unforgettable, but had remarkably little impact besides a lot of people saying ‘for shame’ without hunting for the skunk hidden in the thicket, in my judgment.
2. That comparative forensic accounting analysis I mentioned earlier, which explains to people why things are so expensive, especially compared to other countries.
3. Some degree of ‘actuarial justice’ or personal accountability for the consequences of one’s own risky decisions. Smoking is an example, perhaps obesity. But Youtube is absolutely full of kids trying to do Xtreme moves on various risky sports and getting themselves medical bills in the five digits, or if it’s skiing, six digits.
4. The question is what qualified as ‘catastrophic’. A simple and financially reductive way to think about it is, “A cost in a year, for everything related to any medical event or condition, that exceeds a reasonably annual deductible.” That is ‘highly financially burdensome’. That’s close the auto insurance analogy. If you need a new transmission, is that ‘catastrophic’ or not? Probably better to ask, “Does my insurance cover it, and does it cost more than my deductible?” Another way to define it could be, “Unexpected Risk
Pregnancy is an interesting case study. Why is it so expensive? It seems pretty voluntary, though I’m sure people could make some stretched arguments. Is it expensive enough to be considered catastrophic? What about if you need a C-section because of complications, which costs $2,000 extra. Is that catastrophic?
It’s a tough nut to crack. When standard procedures are relatively cheap, the auto insurance analogy makes more sense. When ordinary life event medical care is extremely expensive, it starts to seem financially overwhelming.
When ordinary life event medical care is extremely expensive, it starts to seem financially overwhelming.
A key statement. For any kind of economics to occur here, we need substitutes; or escape; or ostracism. But in times of crisis, the going rate approaches infinity.
The talk needs to be of cost control, of which I hear very little.
The problem with catastrophic coverage is it economizes early and preventative care, increasing catastrophic care. While extremely high marginal tax rates are an impediment, even very high ones are not and in fact are an inducement to more work, so we while we would have those with very low, some would say zero or negative, productivity idle, those above that would be working even harder. Is the objective work for works sake or work for gain?
I am all in favor of a national catastrophic health plan.
But what should the premiums be? Should private insurers be involved?
My solution is this:
Make Medicare Part A into the insurer of last resort.
To pay for this, anyone who does not carry health insurance must put in about 2-3 per cent of salary. Sort of like the ACA mandate, except that in my program you actually get something for your tax surcharge.
Actually this may not totally cover the cost of claims. If that happens, a small portion of employer paid premiums should be made into taxable income.