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Pointer from Greg Mankiw.
This looks like it is in the spirit of my idea of Setting National Economic Priorities, which is still vaporware. Their initial work seems to be on replacing Obamacare.
If I were doing Project 2017, I would prefer to replace Obamacare en passant, as part of a larger effort to get rid of the uncoordinated set of means-tested programs. That is, I would use multi-purpose savings accounts to replace most forms of government assistance, including food stamps, Medicaid, housing subsidies, and so on.
The Federal government would contribute to these savings accounts a cash amount of, say, $3000 per adult and $1000 per child. However, this amount would be reduced by 20 percent of household income. So, if a family of four had an income of $30,000, it would receive $3000+$3000+1000+$1000 minus $6000 (20 percent of $30,000), or $2000.
Some further thoughts.
1. State and local governments could provide additional assistance.
2. Households could only spend these savings accounts on “merit” goods, meaning food, medical care, child care, housing, and education.
3. To induce households to buy health insurance, they would not be allowed to spend any of the money in these savings accounts on anything other than health care until they can show that they have a catastrophic health insurance policy.
Bronze plans are already catastrophic plans with deductibles equal to average medical costs, which is already much higher than median medical costs given the distribution of medical costs. The problem is they aren’t cheap and cost 75% of a better policy while not providing any benefit for the vast majority and their unpopularity shows this. Yet this wouldn’t be enough to afford a policy leaving most uninsured and unable to access the money at all. With so many uninsured all the benefits of reducing cost shifting and potential for cost control would all vanish.
All health insurance is catastrophic because the cost distribution is so extreme. This family will average costs around $12500. A deductible of $12500 will cost them 70% of this, $8750. A deductible of $25000 will cost them 50% of this, $6250. Would they pay $6250 for coverage where the deductible would wipe them out anyway if they needed it, yet only stand a 6% chance a year of needing it? Even a $2000 incentive doesn’t amount to much. Providing low deductible coverage actually improves affordability by increasing the insured rate more.
These aren’t the high deductible plans we are looking for.
Do you really believe what you say? Because they don’t.
I have zero doubt they are capable of screwing up the only high deductible plans they allow.
Good ideas, but good ideas seem to be losing the battle today.
I’d give it 3 years before Conquest’s second law completely overwhelmed it.
The principle of replacing something with something actually better is sound.
What they are planning to do is somewhere between no plan at all and ritual Hari kari.