In light of Mike’s and Mark’s discussion of prices and costs in health care, two things come to miind:
1) The Dear Leader reportedly will focus on health care in the SOTU speech, with particular reference to the uninsured, a topic about which he couldn’t have cared less during his first six years in office. Apparently, he will propose two central “reforms”: tax deductions for the uninsured to buy coverage, and a cap on the deductibility of employee health care benefits.
Maybe I’m missing something here, but this just seems laughable.
The idea of a deduction for the uninsured is silly: the value of deductions increases with tax rate, and most of the uninsured either don’t pay income taxes or at the lowest bracket. Maybe the reporter got it wrong, and it’s actually a credit. That’s better, but it had better be refundable.
Even so, am I wrong in thinking that this is a giveaway to the insurance industry? In what way do individuals have any bargaining power in the market? It’s easy to get more coverage if you want to pay for it, but presumably part of the idea of health care reform is to pay for it through increasing efficiencies. Unlike the Schwarzenegger plan, there is no community rating provision. Moreover, why do we think that it is the most efficient way to deliver benefits is through a refundable tax credit. This puts all the administrative cost onto the beneficiary. Mark? Mike? Anyone?
The idea of refundable credits for the uninsured is the brainchild of Stuart Butler of the Heritage Foundation, who might the only serious conservative health policy thinker in the country: even those who disagree with him respect his work and think that he is committed to solving the problem of the uninsured. But this doesn’t seem to make any sense.
Instead, Bush plans to pay for it not by efficiencies, but rather by restricting the benefit packages of the already insured, through the deductibility cap. I’m sure that there are some extraordinarily lavish plans out there, but is there any serious policy justification for this way to go? If anything, this seems to be a recipe for business to delete coverage, and throwing more people into the individual market.
2) This segues into Mike’s point that “saying “no” to a really costly treatment that might possibly help the particular, named, individual in room 322 who is the dear grandmother of particular individuals gathered around the bed (and that will get the people who provide it closer to a ski condo or a yacht) is not an easy thing to do.”
At some point or other, we are going to have to have a conversation about which of such individuals we think should be covered, and which should not. It’s a fundamental social choice as long as we rely on private insurance that is funded through tax deductibility. I can’t see how capping that deductibility is the best, or even marginally adequate way to have that conversation. In fact, I can’t even see how to have that conversation.
Instead, we hide it by having regulations about what public health programs will cover and what they won’t. The Straussian in me thinks that that might be a decent although highly imperfect way. Maybe it’s the best we can do. In which case, maybe it’s not so bad to promise that “health care costs” will come down.