The American Spectator : Prolegomena to Any Future Healthcare Summit

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The Right Prescription

Prolegomena to Any Future Healthcare Summit

By William Tucker on 2.23.10 @ 6:08AM

Immanuel Kant no doubt had a better understanding of metaphysics than Democrats have of health care.

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Here are a few suggestions:

• Take the tax advantages enjoyed by people under ERISA plans and extend them to everybody.

• Scrap the antiquated system of state licensing and allow insurance companies to sell policies across state lines.

• Don't mandate coverage. Instead, let insurance companies practice UNDERWRITING, charging people according to their health, age and other factors that predict how much medical service they are going to be demanding.

• For those people whose medical condition prices them out of the market, set up high-risk pools along the lines of those used to cover high-risk drivers.

• Adopt a few simple measures of tort reform that have proven to limit doctors' insurance costs without depriving injured patients the right to compensation. The simplest is to put upper limits on now open-ended claims for "non-economic damages" and "pain and suffering." Adding a statute of limitations of five years for claims is usually sufficient to bring the worst excesses of malpractice law under control.

The best way to equalize the system would be to offer everybody a $3,000-5,000 tax exemption for purchasing medical expenses and insurance. Then tax everything above that level as regular income. This would avoid such ridiculous schemes as the ridiculous 40 percent "Cadillac" tax (which everyone will figure out how to avoid anyway) while curbing the impulse of employers to funnel their employees tax-free benefits.

This, of course, is the outline for Health Savings Accounts, the most successful reform to come out of the 1990s efforts. America's Health Insurance Plans (AHIP), the industry research organization, estimates that more than 8 million American now have HSA's -- 3 percent of the population. These people are paying their own way without the help of the government.

Democrats object to this -- and have attempted to eviscerate HSA's -- because they claim that these people are "opting out of the system." Democrats make the same charge against young people who they say will buy only minimal coverage -- which is why part of their health plan involves having Congress write insurance policies the same way they have been mandated for decades in the states. If Congress doesn't require sufficient coverage, they argue, people will be ducking out on covering other people's costs.

Nothing could be further from the truth. A person who buys a $3,000 high-deductible policy is making every bit as much of a contribution as the person who loads down with a $20,000 of first-dollar coverage. Why? Because he or she is making fewer demands on the system. That is what underwriting is all about --anticipating people's demands on the system and charging them accordingly. If Congress would just leave the insurance companies alone to underwrite insurance according to actuarial principles, consumers could buy what they want and only minimal subsidies would be necessary to get everybody covered by the system.

The Democratic health plan is an elephant that will bring forth a mouse. All the bureaucracy and federal dictates will only produce a system that is less than what we already have. There is a much simpler way.

Allow insurance to be sold across state lines, level the tax advantages between people who get their insurance at work and those who buy on the market, let insurance companies do the underwriting without government mandates, and then provide targeted subsidies to people with serious medical conditions. Those are the parameters. If anything else remains to be done, pass another law next year.

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topics:
Health Care

About the Author

William Tucker is the author of Terrestrial Energy: How Nuclear Power Will Lead the Green Revolution and End America's Energy Odyssey.

Letter to the Editor View all comments (14) | Leave a comment

Bill| 2.23.10 @ 9:28AM

Insurance premiums are merely a reflection of the underlying problem- the actual costs of health care.
Health insurance companies don't operate on wide profit margins- state regulators set the price of every policy based on actual claims history. Insurers are just the latest corporate bogeyman. Last year it was oil companies, then banks, today it's health insurance.

Kris Lepine| 2.23.10 @ 9:34AM

Very informative article. I have a question though. My husband is a Union Carpenter retiree. I've watched as the (thug) union leadership has robbed the pension funds. Ralph Mabry, ex leader of the Detroit District Counsel, is currently under indictment for a 2009 embellelment charge and serving time in prison now for an earlier crime involving union funds. Why wouldn't those leaders want to "dump" all union members into a public healthcare option? I can't see union dues being reduced at any time, so with the savings of a public healthcare system, will have more money at their disposal to use/steal.

Making the union "cadillac" funds exempt from taxation makes no sense to me, unless it's a ploy to get the plan through. THEN the unions will force their members into the public plan?

Another thing I never hear mentioned and I saw this first hand with a Canadian friend. When something is free, there is no value to it, so it's misused. My Canadian friend used the "free" healthcare system for any little thing. There were no limits on her usage and she abused it.

Welfare is the same. If you knew a check was going to appear in your mailbox once a month, and you had to do nothing for it, the temptation is strong, especially among the young, to waste it. And abuse is the name of the game where government programs are concerned.

Bill Hussein O'Stalin| 2.23.10 @ 9:42AM

There is one provision in the Senate bill which will ensure that all other arguments fade by comparison.

There is a provision that requires health care companies to spend 80% of the premiums on health care. This will be a federal law.

Historically, health insurance companies were not allowed to spend in excess of 65% of the premiums on health care. That left an adequate amount for the overhead and a small profit.

The health insurance industry is 88th in terms of profits out of the top 100 American companies, with profits margins of 3.6%.

If the Senate bill passes, 5 million citizens currently employed in the health care industry should see their jobs disappear within 18 months of the bill's implementation.

Tim| 2.23.10 @ 10:11AM

Taking this route deprives politicians of the power to hand out favors and extort donations from a very large industry.

Al Adab| 2.23.10 @ 10:42AM

They will meet, and the Pres. will emerge stating there is no common ground so we will just go ahead and use reconciliation to pass what the country needs. Or words to that effect thereby blaming those nasty Republicans for everything.

The more things change...

Yosemeti Sam| 2.23.10 @ 11:07AM

Re column - "Is our Children Learning?"

To American Spectator:

Appears I strike Liberal/Leftist nerves.

Do you or do you not validate email addresses
with posts?

You let an asshole - pardon the shorthand -
speak as if he were me.

Get your AS act together!

Do you have hacker firewalls - at all?

If not - moving on!

AS Webmaster - what's up with this compromise?

BJ| 2.23.10 @ 2:13PM

It's a prom date republicans: PLEASE, don't take off your dress!

darcy| 2.23.10 @ 2:16PM

Ditto another poster: very informative article, bringing together in one piece a cogent yet thorough overview of our current health care insurance landscape.

But with that other poster, citing misuse of the system in Canada, I would have to agree: moral hazard is a huge factor in our current sky-rocketing health care costs.

Hospital emergency rooms in AZ, for example have all but shuddered their doors due to giving out "free" treatment to illegal immigrants. It's not only that they shouldn't be here in the first place, but free care acts like a magnet to bring them north: the costs of which are reflected in OUR premiums.

And also, whenever the purchaser does not write the check for service, he stops worrying about the cost, which just happens to now include the cost of administration.

Another thing: If you know the cost of your risky behavior will not put a dent in your pocketbook, you're inclined to act recklessly -- the insurance will cover it. I, for one, think it unfair to be made to subsidize someone else's folly.

As much as is possible, legislation should be written to encourage people to pay their own way.

Or, have we become so lulled by an ethos that denies personal responsibility and promotes nanny-statism that such a desire to fend for oneself is beyond our reach?

Jeff Perren| 2.23.10 @ 2:35PM

One of the two best articles I've seen on the issue in the past year, at least until the recommendations. Even they are far better than most of the social-engineering suggestions I've seen.

However, the key to the problem is to forget social engineering. No one - and most certainly not the Federal government - is responsible for anyone's health. Free the market and costs will be driven to the lowest possible point, consistent with the supply and demand of the goods and services of insurance, health services, and competing alternatives.

Freedom works, but even if it didn't it's better than government dictates.

R Givens| 2.24.10 @ 1:38PM

What a farce. Suggesting discussion after the GOP has had a year to put forward its ideas is daffy.

Obstruction is the only game the Republicans know, but a lot of people want a better choice than Anthem Insurance with 30+% rate increases every year.

How happy will you be when YOUR insurance plays the "death panel" and refuses to pay for more treatment? Can you afford a 30-40% jump in insurance costs? That's what the GOP is standing for.

There are two sides — the greedy insurance companies and people who need health care. Which side do you pick?

Without a public option there will be no end to the rate hikes.