Monday, July 08, 2013

Sure, Let's Break the Tie Between Health Insurance and Employment

Ross Douthat complains that the PPACA does not break the bond between employment and health insurance,
The policy consensus... is that the status quo is actually the problem, and that it deserves to be threatened, undermined and replaced as expeditiously as possible. Wonks of the left and right disagree on what that replacement should look like. But they’re united in regarding employer-provided coverage as an unsustainable relic: a burden on businesses, a source of perverse incentives for the health care market and an obstacle to more efficient, affordable and universal coverage.
Douthat then provides an inaccurate history of McCain's proposal to replace employer tax incentives with an individual tax credit. Douthat pretends that there was something brave in McCain's proposal, and that it played a role in his loss of the 2008 election, but presents no evidence in support of either suggestion. The problems with McCain's proposal did not lie in its severing the tie between insurance and employment, but in his reliance upon dogma - the notion among factions of the Republican Party that the biggest problem we have with health insurance is that people have too much of it - and the fact that he would have thrown working Americans into the individual health insurance market, with some sort of government-run insurance program to pick up the unprofitable applicants, those with pre-existing medical conditions. The problem wasn't that McCain wanted to shift out of the employer-provided insurance model, it was that he wanted to radically redefine the entire health insurance market to the significant detriment of individual workers.

Douthat argues that having insurance exchanges and subsidies constitutes a "center-left alternative to the existing system", never mind that right-wing advocacy groups like the Heritage Foundation had a long history of pushing for exchanges, and that nobody has proposed that a system of exchanges can function without subsidies. Douthat has a point, that much of the rest of the program is designed to perpetuate the status quo, and he's also correct that demagoguery from both political parties makes it difficult to disturb that status quo, but he's implicitly arguing that the exchanges are a superior alternative to employer-provided health insurance. So why no criticism of the Republican factions that are working overtime to impede the implementation of the exchanges, in the hope of crippling individual access to health insurance through the exchanges?

Douthat fails to discuss the Republican Party's lockstep opposition to the PPACA, and how that factored into the eventual legislation. What would be better than an "individual mandate", and a continuation of traditional subsidies to employers that offer health insurance? A tax. Leaving aside for the moment John Roberts' ultimate conclusion that the individual mandate is a tax, why couldn't we fund the PPACA through a tax, again? Many aspects of the bill could have been improved had the Republican Party, or even a handful of Republican Senators, decided that it was better to pass a good reform bill than to try to take down the President. That strategy seemed to be working in 2010, so they doubled down. How many times have House Republicans brought absurd "repeal" votes to the floor, demonstrating their fondness for grandstanding and demagoguery? How many times have they offered to sit down with the Democrats to iron out the bugs in the PPACA and make it a better, more functional bill? Would that be roughly 37:0?

How's this for an idea? Phase out the present subsidies to businesses in favor of subsidies to individuals, but with the subsidy credited toward the cost of any employer-sponsored health coverage, while replacing the individual mandate with a modest payroll tax that is also credited to health insurance purchases, whether through an employer or through the exchanges? If your employer doesn't provide insurance you can take the entire subsidy with you when you purchase through an exchange. If you choose not to obtain health insurance, you don't get anything back - or the government could enroll you in a bare bones catastrophic insurance plan so that should you require medical care following an unexpected accident or illness your care providers can get paid.

Perhaps Douthat should also ponder this: if the tie between health insurance and employment is the huge evil he perceives, it can be wiped away in a heartbeat by implementing a single payer system, or through a system of exchanges in which the consumer picks an approved, privately administered health insurance plan while the government pays the premium.

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