Tag: "health insurance exchange"

Keeping Score

Why is it that Washington is spending so many hours over so many months — on top of two decades of prior conversation, analysis and debate — and is still failing to come up with a reasonable way to reform the health care system? Today I will slice through the Gordian Knot and give you a simple way to keep score.

There are four basic questions to be asked of any health care system. If you answer these questions the right way, the path to reform is rather easy and straightforward. But if you answer even one question the wrong way, you will get caught up in a cycle of complexity — with fix upon fix, each trying to patch up the problems created by the previous fix.

Hint: Right answers are the ones that give people socially good incentives. Those are incentives to meet your own needs without imposing external costs on others. Wrong answers are the ones that give people socially bad incentives. These are perverse incentives to impose external costs on others in the process of pursuing your own interests.

“1-2-3…that’s how elementary it’s going to be”

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How Care Can Be Rationed in a Health Insurance Exchange

The government will coerce doctor and patient both through their efforts at "tiering" physicians based on compliance with guidelines and rationing. This already exists through some private insurers but in the health insurance exchange government pressure will add to the tyranny. If your doctor is not compliant or complicit with the guidelines you will pay more to see that doctor. Different tiers are tied to variable co-pays patients must ante up. Since these tiers are also tied to utilization and cost, doctors who see sicker patients will be tiered lower and their patients likewise penalized with higher co-pays. This shows why (despite President Obama's promise) you may not necessarily get to keep your own doctor or your own plan.

You Are Not Going to Be Able to Keep Your Health Care Plan

The House bill will (over time) allow all employers to drop their coverage and send their employees to the government-run, government-regulated health insurance exchange, where the federal subsidies will be much higher than the tax relief for employer-provided insurance. Here is the time table:

  • First year – "smallest" employers (10 or fewer employees)
  • Second year – "smaller" employers (20 or fewer employees)
  • Third year and thereafter – "larger" employers (21 or more employees, at a schedule and pace the Commissioner deems appropriate)


"A little bitty tear let me down"

Should Public Plans Compete Against Private Plans in Health Care?

Two Wall Street Journal editorials have already tackled this issue — explaining the unfairness of public/private health insurance competition and the likely crowd-out of private insurance, based on a Lewin report. So is there anything else to say? Actually, quite a lot. Bottom line: It’s very hard to do this right; but if the advocates are intellectually honest, they can start with the State Children’s Health Insurance Program (SCHIP) and adopt a proposal Gene Steuerle and I made some years ago.

Here’s the background. Everyone is assuming that President Obama will keep his campaign promise to create a parallel system for health insurance. Those who don’t get insurance through an employer would have the opportunity to buy insurance in an Exchange. Details on how the Exchange would work are murky; and the clearer they become, the worse the whole idea sounds. But that’s not the problem. The deal-killing issue is whether one of the plans in the Exchange will be a government plan.

Two immediate questions jump to mind. What would it mean for a public plan to compete with a private plan? Why would anyone want that to happen? Let’s consider each of these in turn.

We are the Children

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Medicare for All Would Crowd Out Private Coverage

The Obama health plan envisions an alternative to employer-based health insurance, called a health insurance Exchange. Premiums would be community-rated, people could choose a new plan once a year and the out-of-pocket premium would be limited to be no more than, say, 10% of income.

Some Democrats in Congress insist that one of the options offered in the Exchange be a public plan (e.g., Medicare for nonseniors). A Lewin Group report estimates that 32 million people would lose their private coverage and enroll in the public plan if it paid Medicare-level reimbursements and eligibility were limited to the small firms, self-employed and individuals.  The number of people dropping private coverage and enrolling in the public plan would increase to 119 million people if eligibility were open to everyone.