May 4, 2013

REFORM IT, DON'T END IT:

What Health Insurance Doesn't Do (ROSS DOUTHAT, 5/04/13, NY Times)

[I]f it turns out that health insurance is useful mostly because it averts financial catastrophe -- which seems to be the consensus liberal position since the Oregon data came out -- then the new health care law looks vulnerable to two interconnected critiques.

First, if the benefit of health insurance is mostly or exclusively financial, then shouldn't health insurance policies work more like normal insurance? Fire, flood and car insurance exist to protect people against actual disasters, after all, not to pay for ordinary repairs. If the best evidence suggests that health insurance is most helpful in protecting people's pocketbooks from similar disasters, and that more comprehensive coverage often just pays for doctor visits that don't improve people's actual health, then shouldn't we be promoting catastrophic health coverage, rather than expanding Medicaid?

Liberals don't like catastrophic plans because, by definition, they're stingier than the coverage many Americans now enjoy. But this is where the second critique comes in: If the marginal dollar of health care coverage doesn't deliver better health, isn't this a place where policy makers should be stingy, while looking for more direct ways to improve the prospects of the working poor? Some kind of expanded health security is clearly a good thing -- but if we want to promote economic mobility as well, does it really make sense to pour about a trillion dollars into a health care system that everyone agrees is deeply dysfunctional, when some of that money could be returned to Americans' paychecks instead?

There are a variety of ways this could be accomplished -- a bigger child tax credit for struggling families, a payroll tax cut to boost workers, an expanded earned-income tax credit to raise wages at the bottom, health savings accounts that roll over money left unspent.

Democrats already gave us the mandate, now we just have to mandate an HSA/catastrophic minimum.
Posted by at May 4, 2013 6:06 PM
  

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