The Right Prescription
Health Reform: Where to Go From Here
Republicans and conservatives now have their first chance to be heard.
The Scott Brown political earthquake has had more far-reaching implications than anyone anticipated. With the public admission of Nancy Pelosi that she does not have the votes in the House to pass the Senate health bill, President Obama’s government takeover of health care appears to have stalled out, at least for now.
What this means is that Republicans and conservatives now have the first real opportunity to be heard on alternative health reform ideas. To prevent the return of socialized medicine to center stage, we should move aggressively with reforms that will solve what the public is really concerned about.
Cover the Uninsured
The well-kept secret of health policy over the past year is that the uninsured can be covered for little additional net cost, without the government takeover of health care, rationing, new health care bureaucracies, or any of the other central components of Obamacare.
No one wants to see anyone suffer or worse because they can’t get essential health care. The lack of a clear safety net for the uninsured is what gives Democrats the political lift to keep coming back for socialized medicine. Reform now should focus on the modest changes necessary to establish a true safety net that will ensure that no one will be denied essential health care. Only that will permanently protect the health care of the American people from government takeover and control.
Real health reform should begin with Medicaid, which already spends over $400 billion a year providing substandard health care coverage for 50 million poor Americans. Congress should transform Medicaid to provide assistance to purchase private health insurance for all those who otherwise could not afford coverage, ideally with health insurance vouchers. This one step would enormously benefit the poor already on Medicaid. The program today pays doctors and hospitals only 60% of costs for their health care services for the poor. As a result, close to half of all doctors and hospitals won’t take Medicaid patients. This is already a form of rationing, as Medicaid patients find obtaining health care increasingly difficult, and studies show they suffer worse health outcomes as a result. Health insurance vouchers would free the poor from this Medicaid ghetto, enabling them to obtain the same health care as the middle class, because they would be able to buy the same health insurance in the market.
Ideally this would be done by reforming Medicaid financing to provide the federal assistance to the states for the program through finite block grants, which do not vary by matching increased state Medicaid spending as under the current system. With finite block grants, states that innovate to reduce costs can keep the savings. States that operate programs with continued runaway costs would pay those additional costs themselves. Such reforms worked spectacularly to stop the runaway costs of the old AFDC program when Congress adopted welfare reform in 1996.
Give states the incentive to embrace such reform with a block grant formula that would provide states with increased funding sufficient to provide assistance to all those who truly cannot afford health insurance, counting continued state Medicaid funding, along with broad flexibility to redesign their Medicaid programs. The voters of each state can then decide how much assistance for the purchase of health insurance to provide each family at different income levels. This would rightly vary with the different income and cost levels of each state.
This would not cost much because only about 12 million
Americans arguably cannot afford health insurance without some
public assistance. Out of the 47 million uninsured we keep
hearing about, 9.7 million are already eligible for current
government programs like Medicaid or SCHIP but haven’t signed up.
Another 6 million are eligible for employer sponsored insurance
but have not signed up for that either. Another 9 million are in
families earning more than $75,000 per year. Another 10.2 million
are immigrants, legal or illegal, and not U.S.
citizens.
Just give the assistance necessary, counting what they can reasonably pay based on their income, to that 12 million to buy private health insurance. That is the key to avoiding a multitrillion-dollar new entitlement involving government rationing, which would trash the best health care in the world the American people now enjoy. With broader welfare reforms involving positive incentives, we could end up with less total government spending than today.
Completing the Safety Net
But a second step is necessary as well to ensure a complete safety net. Federal funding should also be provided to help each state set up an uninsurable risk pool. Those uninsured who become too sick to purchase health insurance in the market for the first time, perhaps because they have contracted cancer or heart disease, for example, would be assured of guaranteed coverage through the risk pool. They would be charged a premium for this coverage based on their ability to pay, ensuring that they will not be asked to pay more than they could afford. Federal and state funding would cover remaining costs.
Such risk pools already exist in over 30 states, and for the most part they work well at relatively little cost to the taxpayers because few people actually become truly uninsurable. This works far better than forcing insurers to cover everyone regardless of pre-existing conditions, or regulation such as guaranteed issue (forcing insurers to cover everyone who applies regardless of health condition) or community rating (forcing insurers to charge the same or nearly the same to all regardless of health condition). Such regulation has been proven beyond dispute to cause health insurance premiums to soar. That is because it is like requiring insurers to provide fire insurance for houses that are already on fire. With the above reforms, those cost increases are completely avoided, while ensuring that everyone has someplace to go to get essential coverage and care.
The law already provides that insurers cannot cut off already existing policyholders, or impose discriminatory rate increases, because they become sick while covered. That would be like allowing fire insurers to cut off coverage for houses once they catch on fire. If this law needs to be modernized, it should be.
With these reforms, those who have insurance can keep it, those who can’t afford it are given help to buy it, and those who nevertheless remain uninsured and then become too sick to buy it have a back up safety net in the risk pools. Notice that this completely solves the problem of the uninsured without any individual or employer mandate, which are unnecessary gateways to enormous trouble. Once the government adopts such mandates, it is inexorably led down the path to socialized medicine.
About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
Letter to the Editor View all comments (116) | Leave a comment
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Bill Hussein O'Stalin| 1.27.10 @ 7:05AM
It would be better to fight for finishing the border fence first along with real immigration reform. While that fight is waged, they should point out that the number of American citizens without health care is about 12 million. Only when you mix in the illegals does those figures move to 30 million.
Medicare and Medicaid are two programs headed to insolvency like many government programs. The Republicans should insist on flat lining government growth and call for a 2% reduction in the size of each and every government agency not related to Homeland Security or Military defense. That would easily pay for all health care.
Public service employment just passed private sector employment several weeks ago for the first time in our nation's history.
These are all related issues and unless they are handled together, little of consequence will occur.
republicanblack| 1.27.10 @ 1:21PM
Mr. O'Stalin,
I will not treat you bad because of the good half (irish). But you complain about illegals but where were you between '94-'07, the republicans ain't gonna do anything about illegals because their biz buddies make too much money on illegal labor, groves, meat cutting, restaurants, argi-business, etc. But let me inform you since you want to bring up culture/race with ur name. If anyone is going to do anything about illegals its Obama. WHY? because he is black. And why that matters, because in any population illegal labor affects minorities the most, thus illegals affect blacks so if you think Barak is all about O'Stalinism he is your best choice.
And another thing my friend maybe you need to look at why your argument against reform is flawed to begin with and isn't a true conservative point of view, I hate to do this but maybe you need to look at history and this article boy I love this guy he hits it on the nail every time, but I guess this is the rhetoric u get when FOX news does the thinking
http://keironjackman.wordpress.....ashington/
Ken (Old Texican)| 1.27.10 @ 9:07AM
Thank you, Mr. Ferrara
A very well written and thoughtful column.
I am CFO of our company, ...with a six thousand dollar deductible plan....and 100% coverage after that.
In addition, our company itself pays first dollar coverage for that $6,000.
Over the last four years, we have a net savings on health insurance premiums of about 30 % per year.
In addition, We have built a "kitty" to self insure those $6,000 deductibles for fully a third of our workforce in any given year .
Your numbers have certainly worked for us.
Al Adab| 1.27.10 @ 10:37AM
Ken,
Plans such as you outline are a very positive step and do exist widely.
Why upon retirement do individuals necessarily give up their coverage? Could they not continue "in the pool" by paying themselves the premium the company once payed on their behalf?
Also, could not local community hospitals establish membership co-ops like credit unions to provide, for an annual retaimer or "membership fee", needed service coverage? PHO's are successful in many areas of the country. Cannot they be encouraged through tax credits against premiums?
These concepts, and many others like them, represent a Conservative, market driven approach to universal coverage. I fear however, that coverage is not the goal but rather control.
Indiana Alex| 1.27.10 @ 9:14AM
This is a liberals nightmare. People in charge of healthcare decisions instead of a government pannel?
Who ever heard of such a thing?
JP| 1.27.10 @ 11:02AM
Besides what Peter Ferrara's pointed out, there are many other ideas concerning Medicare as well (probably the biggest entitlement). All are market based, and feature an assortment of tools, subsidies, and inventives that meet patients needs, as well as the doctor's and insurance companies.
In the short term (FY 2010) nothing will be done; the Dems will not give up on universal care run by the federal government. Thier base will not allow it, and I don't think the GOP is as foolish as to attempt to bail them out with one of thier famous compromises (note to Lindsay Gramm and John McCain -take a very long vacation).
Once the dust settles from the 2010 election, there will be enough GOP and Democratic lawmakers to forge real bi-partisan solutions for both Medicare and Medicaid. The President will have his healthcare feather in his cap, and all can come out on top. This nation cannot afford anymore to ignore this issue. And I think the Left has finally figured out it can no longer demonize the GOP over these 2 very expensive entitlements. I mean they can try, but if Obama and co. wish to evolve into a permanent minority party all they need to do is, "Stay the Course".
On deck: Social Security
Al Adab| 1.27.10 @ 11:23AM
re: SS
Best fix would be to retain the deduction, invest the money in a privately owned IRA or 401 or similar until say age 59 1/2 then allow use as the person sees fit. Exceptions could be made for medical necessities and the like, but putting people in control of their own money is a great step away from dependance on government. Of course that is what they can never allow. They want control.
Think as well what such market investment would mean for the capitalization of the economy. The growth rates would explode creating what JFK called a "rising tide" which lifts everyone.
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Liberal Reader| 1.27.10 @ 12:19PM
Republicans don't want health care reform. They want health care reform to be the "Waterloo" of Obama.
Al Adab| 1.27.10 @ 2:13PM
Not true LR, see my above. Reform simply does not mean govt. control or provision.
Although, I hadn't considered the St. Helena solution. Might not be a bad idea.
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Rocco| 1.27.10 @ 12:59PM
"With the public admission of Nancy Pelosi that she does not have the votes in the House to pass the Senate health bill, President Obama's government takeover of health care appears to have stalled out, at least for now."
Bullshit! I don't trust that lying slimebag Democrat Congress to give up that easy. I suspect that they will try some legislative maneuver, force the House to agree with the Senate version of the bill, and "wink, wink, we'll get it right later with simple majority votes." That way they can continue to overturn the will of the people, of late expressed in the election up in Mass, and work around the 60-vote majority requirement in the Senate and a messy House-Senate conference to reconcile their bills. The sooner we declare open season on these sleezebags, the better the country will be.
I didn't spend 30 years in uniform only to witness the perversion and subversion of our Constitution, which I and millions of others swore to protect and defend. Against ALL enemies, foreign and DOMESTIC.
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Jay Sacco, MD| 1.27.10 @ 2:36PM
The PC pabulum concerning health care reform must end and a new era of self responsibility must replace the expectation of "free" care to rescue those in the throes of totally preventable maladies that serve to unjustly financially burden those of us who lead conscientious lives. Furthermore, we all need to understand that for the "liberal/progressive" envy machine, attacking medicine from Lyndon Johnson onward was, for them, their first test case to bring down a successful national corporate structure. These incapable reprobates have promulgated a derisive campaign against the BEST health care system the world has ever seen based on a foundation of lies and half truths. They have been successful in many ways but if they are allowed to place the yoke of "Obama-Care" upon our society, that will mark the end of our way of life based on The Founders' constitutional concepts. Additionally, "affordable access" could easily be achieved by permitting insurance companies to compete for health care dollars across ALL state lines. The political machine in DC will not allow this because, if they did, the lobbying dollars from these companies would dry up in an instant. Corporate executives, bankers and small businessmen everywhere should not be shocked to see these same liberal, progressive hate-mongers attempt analogous deceptions to usurp their successes in an effort to equalize all manner of parameters for their chronically unmotivated and socially and fiscally dependent sycophants. Time to wake up and fight these "Beltway" political crooks who only wish to marginalize what good doctors do for patients and use their hypocrisy to enrich themselves!
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Ken (Old Texican)| 1.27.10 @ 4:29PM
Doctor, we are with you, sir. If this monster passes, we will hope you docs and the truckdrivers .....take a sabbatical.
If our congress critters can't stop this, we productive citizens can. Stock up on food and essentials, guys.
Rick Banas | 1.27.10 @ 4:35PM
The Right Prescription for Health Care Reform needs to include innovative approaches to help ensure quality at a cost we can afford. This is especially important as we look at the pending impact of the aging of the Baby Boomers in the not-to-distant future.
I suggest Republicans as well as Democrats look to an innovative program developed here in Illinois as a model. Supportive Living is a Medicaid-waiver program that benefits the State as well as older adults and their families. Supportive Living is a much more cost-effective approach than a nursing home for older adults who need some help to maintain their independence but do not require skilled nursing care. The cost to Illinois for a person on Medicaid in Supportive Living is at least 40% less than in a nursing home.
The first Supportive Living community opened just over 10 years ago. Today, there are nearly 120 communities located throughout the State. Last year alone, the program benefitted an estimated 6,000 individuals on Medicaid.
These are people who otherwise would be in nursing homes, costing the state considerably more, or struggling alone at home, increasing the odds of needing either nursing home care or other health care services.
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