The kicker is that the President is asking the GOP to show how it would “put a stop to insurance company abuses, extend coverage to millions of Americans, get control of skyrocketing premiums and out-of-pocket costs, and reduce the deficit” (italics added by me). Many Republicans don’t view expanding coverage as a principal goal of health care reform.
What kind of alternative might the GOP offer? Newt Gingrich and John Goodman offered “Ten GOP Ideas for Obama” in a February 10 Wall Street Journal op-ed:
They argue that the current tax system, which provides some employees with tax-free Cadillac plans while individuals and self-employed get no tax break, is unfair. Instead, they say that “a step in the right direction would be to give Americans the choice of a generous tax credit or the ability to deduct the value of their health insurance up to a certain amount.” They would make health insurance “portable” so that it travels with an employee when they change jobs and also give people the option to buy insurance across state lines.
The Democrats’ bills already include sliding scale tax credits for millions of people – those with incomes up to 400% of the Federal Poverty level who do not have access to employer-sponsored insurance – to buy insurance from a purchasing pool. The Gingrich/Goodman proposal is different in that it would give everyone the option of receiving a tax credit or tax deduction. But what they don’t explain is how big the credit would need to be to make coverage affordable, or where would the money to pay for it come from? The average premium for a family of four in the large group market is almost $13,000 per year, so the tax credit would have to be pretty big to make coverage affordable for most Americans.
Gingrich and Goodman explain that their ultimate goal is to convert health care into a defined contribution program, just like traditional retirement plans have been replaced by 401-Ks: “Many health economists conclude that tax relief for health insurance should be a fixed-dollar amount, independent of the amount of insurance purchased.”
I can see how this would help control health care costs, because individuals would have an incentive to be prudent purchasers (buying coverage that is no higher than the fixed dollar amount). But it could also lead to people buying inadequate coverage, shifting uncovered costs onto everyone else. And, if the fixed dollar amount (“voucher”) didn’t keep up with rising premiums, the value of the contribution would erode over time. I could also see major problems of adverse selection if less well-off people found that they could only afford a less costly plan, while the well-off could supplement the voucher and buy more generous insurance out of their own pockets. Regional differences in the costs of buying coverage would also have to be addressed.
I can also see the appeal of allowing people to buy insurance across state lines. What they don’t explain is how consumers would be protected from being sold a low quality health plan from another state that sets a very low bar for insurance regulation and consumer protections, since their own state insurance commissioner presumably not have the authority to intervene with an out-of-state plan. The Democrats’ Senate bill allows insurance to be sold across state lines, but the states involved would have to enter into an agreement with each other on a regulatory structure.
Gingrich and Goodman have other interesting ideas: designing insurance benefits to improve care for the chronically ill, paying doctors a set amount that takes into account the “quality of care” being delivered but leave the pricing of individual service up to them, and providing more information to consumers. Some of these ideas are included, to one degree or another, in the Democrats’ proposals.
And they propose elimination of junk lawsuits – Amen to that!
But they also express opposition to Medicare cuts, when the fact is that savings in the Democrats’ bills will help extend the solvency of the Medicare trust fund and help pay for coverage for millions.
I think that the Gingrich and Goodman proposal has some interesting elements. The problem, though, is that they offer no way of paying for things like tax credits, they reject using Medicare savings, don’t explain how many people who now don’t have coverage would be able to buy it, and how adverse selection would be minimized. It is not clear, then, if their proposal would “put a stop to insurance company abuses, extend coverage to millions of Americans, get control of skyrocketing premiums and out-of-pocket costs, and reduce the deficit” as Obama insists that the GOP alternative should, or if they even agree that these should be the goals of health reform.
Today’s question: What do you think of the Gingrich/Goodman alternative?
P.S. Thanks to all of you who voted for the ACP Advocate as the “Best Health Policy/Ethics” blog in the Epocrates 2009 Medical Blogs Award Program. The voting ended yesterday at midnight, and the ACP Advocate was the top vote winner, with 51% of the votes compared to 48% for the very worthy and thought-provoking “Covert Rationing” blog and 1% for the Pharma Marketing blog. I am humbled and honored by your support, but of course, a blog is only as good as those who take the time to read it and post your comments – even, or especially, when you disagree with me!
*This blog post was originally published at The ACP Advocate Blog by Bob Doherty*