The American Medical Association wants to require everyone who earns more than five times the poverty level to have health insurance.  The thresholds are $49,000+ for individuals and $100,000+ for a family of four. Failure to comply would not earn jail time.  It would result in higher taxes, however.   The AMA's mistake (quite common in health policy circles) is a failure to recognize that the uninsured already pay higher taxes because they are uninsured.  At $49,000 income, an individual who gets a $6,000 health insurance plan from an employer avoids a 25% federal income tax, a 15.3% FICA tax and, say, a 4% state and local income tax.  If he were uninsured, enjoying taxable wages instead of health insurance, the individual would pay $2,640 of extra taxes each year precisely because he is uninsured.   The problem is not the absence of financial penalties; we already have them.  The problem is that the penalties primarily go to Washington, DC; whereas the free care (if needed) is delivered locally.   The solution is to coordinate tax and spending programs (Gov. Romney is trying to do this in Massachusetts).  There is no need for a mandate.

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In all my years of interest in health economics, I cannot recall a study quite as stunning as the one that appeared last week in the New England Journal of Medicine.

The conventional wisdom among health experts across the ideological spectrum is that people need health insurance to get good health care.  Indeed, to some politicians the terms "no health care" and "no health insurance" are interchangeable.  Almost as widely accepted is the view that some health plans deliver better health care than others.  But the new study shatters those assumptions. Continue reading New Study →

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How can patients make good choices if they cannot compare prices and quality of service in the marketplace?  This is the problem of transparency.  Yet while pundits talk and politcians threaten to legislate, the private sector already has developed the tools to solve these problems.

• A model developed by HealthMarket allows its insureds to compare the price they will pay for 20,000 procedures performed by virtually every doctor in the country.
• A product developed by Simbro allows patients to compare quality and price data for most hospitals in the country.
• A product developed by eMedicalfiles creates needed transparency for doctors — it allows medical records to travel electronically as patients go from doctor to doctor and hospital to hospital.

The NCPA is holding a briefing on these techonologies on Tuesday.

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The latest issue of National Review has my analysis of the President's new health policy proposals. In addition to a stronger-than-ever push for Health Savings Accounts, the President is calling for tax fairness (giving individually purchased insurance the same tax break as insurance obtained at work), portable health insurance, special HSAs for the chronically ill and allowing consumers to shop for insurance in a national marketplace.

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An interesting feature of the President’s health plan is that HSA plans would receive preferential treatment over other health plans.  Specifically:

1. Only HSA plans would qualify for the low-income family refundable tax credit. 
2. Only HSA plans purchased by individuals would be tax deductible.
3. Only HSA plans would be personal and portable.

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On Tuesday night, President Bush devoted only a few sentences to health policy. At the same time, the administration released a five-page document describing the President's health policy proposals. The reforms described therein are so sweeping and so bold that I would compare them to Hillary Clinton's proposals of a decade ago.

I don't know if the White House will devote the energy and political capital necessary to see this through. But if they do, these reforms will leave a lasting mark on social policy in this country.

Here are the four ideas I find most remarkable. Continue reading Bush’s Health Plan →

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The Wall Street Journal this morning published my online "debate" on consumer driven health care with Joe Antos (AEI) and Robert Reischauer (Urban Institute). It also includes many readers' email comments.

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Tis the season for debate. I debated Uwe Reinhardt (Princeton) at the CDHC conference in Washington last week, but Uwe wouldn't agree to allow the event to be taped and C-Span couldn't make it anyway. Today, Bob Reischauer (former head of CBO, now head of Urban Institute) and I debate many of the same issues – with help from Joe Antos of AEI – on the Wall Street Journal. You can view the debate for free today only. After today, you will not be able to access the debate unless you are a Wall Street Journal subscriber.

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