A solution to the National HealthCare debate: Insuring everyone fairly

Photo: Heritage.org

WASHINGTON, DC, September 25, 2013 — As the healthcare debate comes to its final stages, there is one tactic which Republicans have not tried.  They have not offered a better alternative to the Affordable Care Act.

An alternative that even Democrats would vote for.

SEE RELATED: To blunt Ted Cruz, HHS releases Obamacare premium estimates

Solving our healthcare problems does not require a 2000 page bill with draconian mandates, taxes hidden as penalties and mechanics which will result in increased unemployment and underemployment and a crushing burden on the small businesses which still drive our economy.

All we need to do is borrow the core ideas from the most successful health care systems in the world. Places like Australia, Singapore and the Netherlands. We have to get over our fear of single-payer health care and consider that it might be acceptable as part of a market-based national health care solution.

These three countries as well as a number of others use a mixed public and private system where the government acts as a single payer to provide a basic level of insurance and citizens can pay more through private providers to upgrade their coverage. 

In Singapore they call this a subsidy system. In the Netherlands they call it a social equalization system. In Australia it works like a healthcare credit card. 

SEE RELATED: To blunt Ted Cruz, HHS releases Obamacare premium estimates

In American terms, it is probably most familiar to describe it as a voucher system, even though that term scares some people on the political left.

While in a system like this the government does act as a single payer, it’s role is only to collect and then redistribute healthcare money in a form which guarantees that the money can only be spent on healthcare. The actual spending of the money is entirely in the hands of the individual citizen who spends his share to purchase a plan on the open market from a private provider. 

He can add in additional money to purchase a better plan if he can afford it and considers it a priority.

This solution to our current healthcare problems is simple and elegant and does not involve mandates or nationalization or any more healthcare rationing than we already have now. It will not destroy the insurance industry or bankrupt the population or put people out of work or add a cent to the deficit.

SEE RELATED: House Republicans grapple with defunding ObamaCare

Today Senator Ted Cruz (R-TX) said “I want a competitive marketplace where healthcare is accessible, is affordable, where it is purchased across state lines, where it is personal, where it is portable.” This is that plan.

It just requires a few simple steps:

  • Tax every citizen at a rate of 10% of their adjusted gross income after exemptions and deductions to pay for national healthcare. This tax replaces the Medicare tax, so the real increase in taxation is actually around 6% for most taxpayers. Those with low incomes would pay very little, if anything, because they have little or no taxable income. Medicare and Medicaid would be eliminated.
  • Give every citizen a yearly credit card which can only be used to pay for health insurance. The balance on the card would be equal to the amount raised through the healthcare tax divided by the population. If you have a family, each family member’s share would go on one card.

    Since GDP rises faster than the population grows, the value of the credit would increase faster than inflation.  Right now on average the credit would be about $2000 per person.
  • Require insurance companies to offer a basic plan in the $2000 per year price range. There are policies at that price today. They mostly provide catastrophic coverage and health maintenance coverage with high deductibles and co-pays, but they are adequate for those who need minimal insurance.

    These plans should emphasize preventive care and the use of clinics or a family doctor instead of an emergency room. Unrealistic and unnecessary coverage mandates which are a problem in Obamacare should be eliminated.
  • Require that all health insurance be purchased individually instead of through group plans. Eliminate all tax credits for businesses or other organizations for providing workers with insurance. Eliminate state restrictions on health insurance and allow any consumer to purchase any policy they can afford directly from any insurer.
  • Prohibit insurers from denying coverage based on preexisting conditions, but allow them to increase the cost of coverage by up to 100% above their standard rates for patients with chronic conditions.
  • Allow people to pay any amount they wish above their personal or cumulative family healthcare credit for enhanced coverage or any other special services the insurance companies can sell them. Employers could pitch in to buy a better plan as a benefit to workers as well. Everyone gets basic coverage, but if you want a cadillac plan you can pay the difference.

It is unfortunate but unavoidable that this proposal includes a tax increase, but the cost is applied fairly as a percentage of income for all citizens rather than burdening the working poor and middle class disproportionately as the Obamacare mandate does.

It also amounts to a limited amount of income redistribution, but if the uninsured and those with existing conditions are to be provided for some sort of equalization is unavoidable.

The basic healthcare credit would provide only essential coverage, but pooled by a family it could purchase a better plan, and the system allows the consumer to add additional money to buy better coverage. 

Most importantly all of the money spent goes into a free and competitive health insurance market where competition without artificial government restrictions will keep prices low. Without those restrictions it is actually more of a competitive free market than we have today.

This proposal is bare bones, but the basic math works. It would inevitably end up being fleshed out by Congress, but hopefully with some restraint. It does what Obamacare is supposed to do but does it at a lower and more equitably distributed cost. It is universal health coverage at a rate of taxation which is not significantly higher than what we are paying into the system now through taxes for Medicare and Medicaid and private insurance premiums. 

Obamacare is estimated to leave 10 million or more uninsured. This proposal would truly insure everyone.

Democrats hold up single payer as the ideal solution to national healthcare and Republicans fear the expansion of government power it represents. This kind of market-based single payer approach addresses that fear by giving a passive role to government and leaving control in the hands of consumers. 

It ought to satisfy those who are complaining about the Affordable Healthcare Act on both the left and the right.

Republicans in Congress should be eager to sponsor a plan like this. They can challenge Obmacare from a much stronger position if they have a better alternative of their own to offer.

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Dave Nalle

Dave Nalle has been writing political analysis since the 1980s for newspapers, magazines and now online journals. He is currently Execitive Director of the Center for Foreign Policy Priorities, is on the board of the Coalition to Reduce Spending, and served four years as National Chairman of the Republican Liberty Caucus.

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