Thoughts on US Health-Insurance and Health-Care Reform

Paul Chadwick
December 27, 2009

Now that defective, dysfunctional, and fundamentally different health insurance and health care reform bills have been passed by both houses of Congress, the country requires leadership to define improved legislation that can be passed in 2010.

The bills currently passed have, among others, the following problems:

  1. To the extent that the stipulations on health insurance do not create a public program, but instead a mandate for all Americans to purchase a product from private profit-making insurance companies and face tax penalties for not doing so, they contain provisions that are possibly unconstitutional and at least will be subject to extended litigation and constitutional challenges.
  2. To the extent that these bills provide subsidies derived from federal revenues for people to purchase health insurance from private profit-making health insurance companies with lower benefit ratios than could be achieved by a well-run public insurance option, they institute a program of transfer payments that will be regarded by many upper-middle-class taxpayers as a new, wasteful, and unfair welfare program.
  3. They add complexity to the US tax system and create an unwelcome system of special taxes for funding.
  4. Their passage has been obtained at the expense of reprehensible concessions and earmarks that do nothing to further general health care solutions for Americans but are almost universally regarded as corrupt political maneuvers that will forever stain this legislation if they are retained in the final bill.
  5. Many useful provisions of these bills have their effectiveness delayed for three years until 2013, after the next presidential election. It is incomprehensible why this should be so, and it appears to be a political maneuver. This failure to action will not benefit the party currently in power -- in fact, will provide a potent political argument against those who seek to pass the lasting health insurance and health care reform the country needs.
  6. All of the above problems virtually assure legal and political challenges that threaten to invalidate the legislation, produce electoral reversals that may result in its repeal, and deprive the American public of the desired benefits of universal health insurance and better health care with lower costs.

This is not the change we need.

What would improved health care legislation look like?

  1. Because the Constitution gives Congress the power to lay and collect taxes as well as the power to provide for the general welfare of the United States, instead of mandates and penalties that have questionable constitutionality, a better bill would levy a tax to pay for and create a program to provide a basic minimum standard health insurance for all Americans -- citizens and legal residents. My suggestion would be a flat tax on all income, similar to the current HI employment tax with no upper income cap, and a public program to provide default medical insurance coverage to all Americans.
  2. The benefit levels of the public insurance program and payment levels for physicians should be improved from those of the current Medicare program in order to eliminate the need for supplemental private insurance to assure adequate coverage for drugs, preventive medicine, and essential procedures and to assure physician acceptance comparable to private insurance programs. Benefits should be structured in a way to encourage preventive and in-time care by physicians and to discourage unnecessary or elective emergency-room visits.
  3. The current Part B premiums as applied to Medicare should be eliminated and replaced by having the flat HI tax apply to social security benefits as well as to all earned and employee stock-option income.
  4. Although public medical insurance would be provided by default, there should be an option to maintain or purchase private medical insurance coverage, either individual or employer-paid. All private and employer group plans should be required to provide, as a minimum, benefit levels and payments equivalent to those provided by the public program. Guaranteed issue by private and group plans should be mandated. Exclusions, denials, premium discrimination, and rescissions due to pre-existing conditions should be prohibited, and premium discrimination based on age should be limited to a maximum 2x. For taxpayers who choose to maintain or purchase private or employer-paid group medical insurance, a tax credit should be provided upon certificationof coverage -- the credit being equal to the amount of their HI tax up to a limit set to approximate the average per-capita cost of the public plan. The credit should apply to both employee- and employer-paid portions of the HI tax and be assigned to tax accounts accordingly.
  5. Current Medicaid and SCHIP programs would be eliminated and replaced by the default public medical insurance.
  6. There should be provisions to assure short-tem medical care of visitors and illegal residents who seek it, with a view to reimbursement and reciprocity with country of origin and repatriation or legitimization of status.
  7. No coverage for abortions should be provided by public or private plans except those necessary to protect the health of the mother, in cases of rape or incest, and in cases of genetically compromised fetuses. In deference to taxpayers with strong anti-abortion sentiment, no funding of elective abortions should be permitted from the public plan or from private plans subsidized by tax credits.
  8. All insurance provisions of the legislation should become effective at a maximum of 6 months from its enactment and signing into law -- at latest, at the beginning of the 2011 calendar year.
  9. The bill should establish a standard computerized payment system to be used by all providers and plans, public and private, to streamline reimbursement for service providers and reduce complexity and clerical burdens.
  10. Other programs provided by the bills currently enacted relating to improved effectiveness and efficiencies in medical practice, including pilot programs and evaluations, should be included. However, it might be advantageous to place these in separate legislation. The bills would be more transparent, less confusing and subject to misinformation and misinterpretation if the issues of medical insurance reform and medical practice reform were dealt with separately.

This is what I would prefer to see in the final health insurance and health care reform law.