July 22, 2009

STARTING FROM SCRATCH:

Health Insurance No One Needs (MATT MILLER, 7/22/09, NY Times)

EVERYONE who wants universal health coverage (me included) finds irresistible the rallying cry that all Americans should have the same health benefits that members of Congress have. But Congress’s health insurance — that is, the heavily subsidized preferred provider plan that most members have — is not an ideal model, because it is quite rich. As with other fee-for-service plans, it does little to encourage people to be smart health care shoppers.

Congress’s health plan pays for routine expenses like office visits and vaccinations, for example, which is like auto insurance covering oil changes or new windshield wipers. As a result, the premiums are steep — upwards of $13,000 a year for a family (69 percent of which is paid by the government). To provide the 50 million Americans who are now uninsured with such a plan would require scary tax increases. [...]

One approach would be to require senators and representatives, most of whom earn $174,000 a year, to maintain tax-sheltered health savings accounts, which they would use to finance their primary and preventive care. Today, families may put up to $5,950 annually in such an account — and any amount they don’t use on health care that year can remain in the account.

To make such an approach work for all Americans, we’d need to supplement the accounts of people who couldn’t afford to save the full amount, and of less healthy people, whose costs are higher.

An alternative strategy for Congress would be the new “fitness club” model offered by some doctors, in which members pay $65 a month for same-day or next-day access to primary care services. This would involve no insurance companies, so it would save administrative expenses.

We could then pair one of these primary care plans with high-deductible insurance coverage for catastrophic care, but limit total annual out-of-pocket payments to, say, 15 percent of family income. For a member of Congress whose family had no other income, that limit would be $26,000. If this kind of plan were extended to other Americans, a family earning $25,000 a year would have a limit of $3,750.


Posted by Orrin Judd at July 22, 2009 9:36 AM
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