Nonpartisan Healthcare Legislation

This phrase, “nonpartisan healthcare legislation,” is an oxymoron, unfortunately, but let’s try. And in the interests of full disclosure, my preference is to see private institutions continue to bear the primary responsibility for providing healthcare in America. So rather than moving healthcare into government-run programs, the primary goal of healthcare legislation should be to rewrite the regulations that govern healthcare. The marketplace can deliver healthcare more efficiently than the government, providing more quality healthcare to more people for less money – but to do this in an equitable manner, good regulations are essential. An earlier post, “Healthcare in America” listed some of these ideas – this post is to elaborate on those and add a few ideas that aren’t getting the discussion they deserve:

(1)  Allow individuals the same tax deductions for their health insurance premium payments as businesses receive. No special breaks or special fees, no ceilings or floors on eligibility for the deduction, nothing. Whatever an individual or an employer spends for healthcare is deductible, and whatever healthcare benefits an individual receives are not taxable.

(2)  Make it easier for associations and organizations to offer group health insurance plans, instead of only favoring companies who may or may not provide an individual a job for life. This is the only realistic way individuals who have the financial means to purchase quality healthcare, but don’t work for a company that has a group plan, to ensure their health insurance won’t be canceled if they get sick.

(3)  Eliminate interstate barriers to health insurance companies so they can operate and compete in every state. This is certain to lower costs – it will increase competition and favor companies who have lower overhead. At the same time, abolish the exemption health insurance companies currently have from anti-trust laws.

(4)  Enact tort reform so malpractice lawsuits are reined in. Not only do the inordinately inflated malpractice insurance premium payments charged to doctors increase overall costs, but even more significant are the costs of over-testing and over-treating as a precaution against lawsuits.

(5)  Enforce right-to-work laws in the healthcare industry nationwide. De-unionize healthcare workers. Or reinvent unions to restore the meritocracy to the workplace and allow management to manage. It isn’t the over-market wages that are the biggest problem with unions – this is something union advocates should appreciate more. Union reformers are equally concerned with the cost of benefits and the work rules. These benefits can cost, when you take into account current benefits plus future retirement benefits – literally more than the actual wages. The irony is that these benefits would cost less if healthcare regulations, and the regulatory environment for all essentials – healthcare, water, land, mineral resources, energy – were optimized to promote development and competition. And when you have a unionized health industry workforce, even more costly than the over-market wages and benefits are the work rules – resistance to more efficient procedures, resistance to reducing headcount, resistance to promotions based on merit instead of seniority, inability to fire incompetent workers, and credentialism, which requires hiring overqualified, overeducated (and hence overpaid) medical staff. These indirect costs are staggering and synergistic. Credentialism, for example, is the union’s answer to the meritocracy, by replacing job performance with credentials as criteria for advancement. Credentialism also creates artificial scarcity, since competent personnel who would respond well to on-the-job training and become exemplary medical technicians and nurse practitioners, are excluded because they lack the requisite degree. This is all a consequence of unions. Labor unions and healthcare do not mix well, if you want to provide quality heathcare to more people at a reasonable cost.

(6)  Require health insurance companies to make one simple disclosure in their pricing schedules, updated every twelve months: “During the most recent fiscal year, our company spent X percent of our total revenues paying claims directly to healthcare providers.” This simple disclosure would add a critical variable to aid in consumer evaluation of every health insurance company in America – because the higher this percentage, the more likely this company would be pricing its health insurance at competitive rates.

(7)  Create a privately administered fund that would insure the insurers to cover pre-existing conditions. Just as plans for seniors such as Medicare Advantage cover the gap between what Medicare pays and what a procedure may actually cost, this fund, which insurance companies would all pay premiums into, would cover the difference between what they would charge a healthy new entrant to their plan and what the premium would be if they were evaluated based on their preexisting condition. Depending on how the rollout of association-based health insurance companies is implemented, this fund might not even be necessary, since group plans are generally prohibited from banning coverage to new applicants with pre-existing conditions. But having a super-fund of this manner could also provide another tier of coverage beyond policy limits, enabling insurers to provide another option for consumers who wish to purchase the ultimate in health care.

(8)  Streamline the approval process for new drugs. In general, the rest of the world adopts drugs, often developed in the U.S., years before the same drugs are approved for use here.

(9)  Recognize we are going to need a multi-tiered system of healthcare in America. Rather than forcing everyone to purchase healthcare, by instead enacting tort reform, allowing interstate competition, and de-unionizing the medical profession, free clinics and quality emergency room care will again be affordable institutions that can be supported through private philanthropy and government grants. This is where people who can’t afford healthcare will get their medical treatment. People of modest means who want better healthcare than this can – either through their employer or through associations they can join – purchase existing HMO coverage, or if they consider healthcare to be a huge priority for their families, they will purchase existing PPO coverage. We don’t have to reinvent the entire industry to get decent healthcare for everyone in America, but we do have to accept that someone who is willing to pay premiums totaling $12,000 per year for their health insurance is going to get access to more medical options than someone who whose gross income is $12,000 per year.

Implementing these nine suggestions would bring down the cost of healthcare at the same time as preserving choice and quality. Something that isn’t acknowledged enough is that proponents of healthcare reform all want the same goals – they want America’s healthcare system to remain solvent and continue to offer more quality healthcare to more people. It shouldn’t surprise anyone that the costs of healthcare continue to go up – every year we can cure more ailments! There is a cost to this ongoing improvement. But by properly regulating a free marketplace, we can have the best of all possible worlds.

The most tragic consequence of all this inaction is there isn’t even incremental reform. Any one of these nine suggestions should be on the table. Some of them probably could get voted into law right now, and perhaps should, one at a time. But in the heat of partisan battle, and in the desire to do everything at once, nothing gets done.

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