Health Care Compromise

Guest Essay by Matthew Brown

I admit that I didn't know much about the health care "crisis" in America because I never bothered to figure out what the crisis was.  My default opinion was that the government should not be in the business of health care anymore than they should be in the business of banking or automobiles.  This opinion will never change.  However, I have educated myself recently regarding this "crisis".  I am by no means an "expert", but I think I have a solution that will help a lot (but not completely solve all problems) and that both conservatives and liberals could live with.  The intent is to make things better without offending anyone's core principles.  

 
I see 2 main problems with healthcare:
 
1)  We all pay one price for unlimited access (for some that price is zero, and from what I understand the care is worth the price).  If the consumer is not price sensitive than costs run rampant as the above chart illustrates.  Economics 101.  Unfortunately I cannot offer a solution to this problem that many people would accept.
 
2)  There is not enough competition amongst insurance companies due to an idiotic regulation scheme.  I am convinced that insurance companies followed a similar strategy to cable companies where they prefer to lobby for little local monopolies than openly compete with each other on a national basis.  These monopolies allow them to get away with nasty tactics that include delaying and refusing payment to healthcare providers, rejecting customers with preexisting conditions, and dropping patients on technicalities when they need the coverage the most.  I doubt these atrocities are as widespread as many would have us believe, but I am certain that it happens.   Anyone who has ever tried to buy healthcare for themselves know that it is absurdly difficult to do--I am sure that insurance agents have lobbied for restrictive laws in this area as well.  I think I can offer a solution to this problem that liberals are so eager to fix without offending the sensibilities of conservatives.  In fact, I think conservatives could learn to love it.
 
Now bear with me conservatives, because I want to embrace an idea from Obama that actually has promise.  A healthcare exchange.  I also am about to utter words that are painful for all God fearing Republicans:  WE SHOULD SET UP A FEDERAL HEALTH INSURANCE REGULATORY AGENCY.  Conservatives, please keep reading.  I do not intend to add regulations -- I intend to replace the horrible regulatory structure that we have today.  I wouldn't even bother messing with the state regulatory commissions.  I would just say that any company that registers with the Federal Health Insurance Regulatory Commission (FHIRC) will be allowed to offer health insurance to anyone in the country without any limitation from the states whatsoever.  I am no constitutional lawyer, but I believe the "Commerce Clause" gives congress the power to do this.
 
The FHIRC would develop standardized plans.  They could also make rules that all participating insurance companies would have to follow.  You must accept preexisting conditions.  In fact, you must accept anyone willing to pay the price you offer on whichever of the standardized plans they wish to buy.  We should not need more than 10 standardized plans (in fact, that number seems high to me...let's keep this simple).  You can have HMO's, PPO's, or whatever.  The plans simply describe in detail what is and isn't covered.  Any insurance company that wants to participate in this program must offer all of the plans to all of the people.
 
The FHIRC will only set the rules and verify compliance by participating insurance companies.  They will not get involved with the relationship between doctors and patients or doctors and insurance companies.  Health care providers will be able to file complaints against healthcare companies that do not pay whatever rate is in a contract with said healthcare provider in a timely fashion, but the FHIRC will have no say in the rates found in those contracts.
 
Now the business men (and women) amongst you might ask why would an insurance company leave the security of their local oligopolies in order to engage in true competition on this health care exchange?   The answer is simple.  The government provides tax incentives to companies and individuals who buy insurance from companies on the health care exchange.  This will bring customers to the exchange by the millions, and insurance companies will come if there is demand for their services.
 
Participating insurance companies would have to compete openly on price, since the product to the consumer is identical (standardized plans).  They would also compete on their ability to sign up healthcare providers to accept their coverage.  If a company gets a reputation for not paying the agreed upon price in a timely fashion then the healthcare providers can choose not to accept their insurance.
 
This program will not be without costs.  I am sure that the FHIRC will end up with a budget 3 times what it actually needs.  The tax incentives might cost the government some revenue, or maybe the additional disposable income will be spent by companies and individuals on other activities that generate additional tax revenues.  Regardless, if government's track record is any indication, these costs will pale in comparison to what a "public option" would ultimately cost taxpayers.
 
I'll even throw you liberals one more bone:  if your gross income is under a certain level then you can get a full tax credit for buying the base plan from one of the exchange members.  At some level buying health insurance could actually drive your tax liability to zero.
 
So that is it in a nutshell.  Liberals get the "smart" and "good" regulation of those evil insurance companies that they have been clamoring for.  I am sure that the cheaper of the standardized plans combined with tax benefits will get more people off of the uninsured rolls than the current bill passed by the House.  Conservatives get a free market with more competition rather than less.  Most importantly, we avoid the disaster of a "public option".  I think it is hard to argue that a "public option" would not either use the government's taxing power to squash the competition, or choose to compete by losing money by the billions -- in all likelihood it would do both.
 
This solution will not solve everyone's problems.  We must accept that no solution will do that.  More competition with reasonable regulation can only make things better.  Spread the word!

Comments

[RMurph]

Any healthy person would simply opt for the cheapest plan. As soon as they get diagnosed with a "serious" disease or injury a person would sign up for the plan that covered their particular ailment since being denied coverage based on a pre-existing condition would be outlawed. All healthy people would have "emergency care' insurance until they needed the benefits of continuing care the most obvious example would be the increasing onset of diabetes treatment for an America growing larger by year). The cost of this type of advanced coverage would be significantly higher so everyone else would have to "chip in" to allow for everyone to be covered. And you're back to square one.

[Shane]

I will try an explanation for you that many people see but don't seem to want to accept. Medical care is improving at a non-linear pace. The type and quantity of health care available today, vice some distant past like 1990 is incredible. Few surguries or drugs available in 1990 are not cheaper, thats right cheaper, now then they were in 1990. However there are far more drugs, treatments and surguries available today, a scant 19 years later. Medical care is expanding because medicine is improving. It is becoming a larger cost in the US because there is something to spend the money on. The cost of personal computing is far higher today then it was in 1980. A mear 29 years later it is now a significant portion of the GNP. How do we accept this in personal computing but fail utterly to understand the relationship with medicine? There is no health care crisis. Health care is improving geometricly, hence it is taking up more of the GNP.