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A pragmatic solution to the healthcare crisis
There is no rational way to argue that a healthcare crisis doesn’t exist in America. There are 47 million Americans that have no healthcare coverage, and that is unacceptable. Even for many who can afford health insurance, the costs have simply spiraled uncontrollably. Luckily, from an economic perspective, there is a pragmatic, simple solution for resolving this crisis — a government-provided subsidy.
A government-provided subsidy would provide individuals with funds to pay for health insurance plans that are pre-approved based on strict guidelines. And the plans would be provided through existing private health insurance companies. This system would ensure health insurance for every American and minimal changes to the current healthcare system.
I further envision that once a provider creates an approved plan, consumers would get to choose their desired plan. And, if consumers desire coverage beyond what is provided in the basic plan, then they would be given credit for the cost of a basic plan. In other words, should a customer opt for a better plan, the customer would receive a credit that would decrease the total cost of the increased coverage by a designated amount. Therefore, all Americans would benefit from the system, whether or not they choose a basic plan or a plan providing additional benefits.
There are several benefits to implementing the subsidy system that I propose. First, the healthcare system would require little change. The structures are already in place, and the only difference would be, perhaps, more government regulation of the insurance industry. But, after some of the recent insurance failures, I doubt many Americans would object to additional oversight.
Second, the subsidy would infuse capital into, and stimulate, the economy. This infusion would go primarily to insurance and healthcare companies and would trickle down to the masses. That is because with approximately 47 million additional customers, there would be a huge increase in the number of plans sold, necessitating additional employees in these industries. Not only would more employees be needed directly in these industries, but also in numerous related businesses.
Third, although the basic plans would only have to comply with the statutory minimums, providers would be given an incentive to provide more than the minimums. That is because if every provider offered plans that only met, but did not exceeded statutory minimums, customers would be indifferent as to which provider to choose for coverage. Instead, providers would start to offer incentives to customers to choose their respective plans. To illustrate, a provider might offer a greater number of doctors in its network, or lower office-visit co-payment amounts, or another sweetener designed to lure customers away from competitors.
Fourth, my proposed plan would encourage specialization amongst providers. In order to differentiate plans, providers would probably start to offer sweeteners specific to particular customers. Put differently, providers would start offering plans tailored for customers with specific ailments and/or issues (for example, the elderly). Specialization would promote better coverage, as the coverage serves people for whom a particular plan is designed.
Fifth, from a provider perspective, the participant pool is bigger, and that mitigates the risk of loss from extraordinary cases. As participant pools become larger, the more accurate estimates become because the pools are less affected by statistical outliers. And the more accurate estimates become for providers, the lower the risk that a provider will incur a devastating loss that may put it out of business.
This rational, moderate, and simple healthcare proposal appears to appease both Democrats, who desire healthcare coverage for every American, and Republicans, who fear the “socialization” of the healthcare system.
Funding this plan would involve increasing taxes on things that tend to cause health problems in the first place (a so-called “sin tax”) — obvious things being tobacco, alcohol, and foods that are high in saturated fat. Of course, doing so would probably have the desired dual effect of motivating individuals to make healthier decisions, which in turn would lower healthcare costs — a win-win situation.
Morton, who lives in Rockville, Md., and Cambridge, England, is an attorney and certified public accountant who has worked for the Securities and Exchange Commission, and consulting and auditing firms.
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