Grodon's Notes: Health care financing: the 80/20 questions are the only questionsToday I'm reading Brad DeLong's proposal. I think the mixture of single payor with huge MSAs and backup catastrophic coverage is fascinating, and consistent with the evolution to the above ...
- Everyone residing in American will have the second option. Always. I call this the "HMO from Heck Solution".
- The first (class) option will be available in a number of ways. Some will get it via risk sharing plans. Some will pay cash. Some will buy it on the gray market ... or the black market. I call this the "Libertarian Solution".
- Five years after this choice is available, after development costs have been recovered and competition has arisen, the specifics of the choices will change. The "first class" choice will now become the guaranteed "second class" choice and it will be "cheap". There will, however, be a new, better, very expensive, "first class" choice.
- There will be a huge amount of spending on luxury experiences associated with health care and on "alternative" therapies -- none of which will have any impact on outcome.
- Innovation, invention, chaos and harm will be far greater in the Libertarian world than in the HMO from Heck world. It is the Libertarian world that will crush costs and convert the "First Class" option into the cheap and universal "Second Class" option.
- NIH research funding will shift to favor development of solutions that provide 80% of value for 20% of the cost -- rather than the current disposition to the "best possible" solution.
- Once people wrap their heads around this, and that will take a while, they'll decide having the "HMO from Heck" isn't the worst thing in the world....
- 20% Deductible/Out of Pocket Cap: The IRS snarfs 20% of your family economic income. 5% of it is an increase in taxes (but that replaces your and your employer's current health insurance premiums). 15% of it goes straight into your Health Savings Account. That HSA is then used to pay all your family health bills. If your expenses in a year are less than what's in your HSA, the balance is rolled into your IRA (or, if you prefer, returned to you with your tax refund check).
- Single-Payer for the Rest: If your HSA is emptied and you still have more health bills that year, the federal government pays them. The main point, after all, is insurance: if you fall seriously sick, you want right then and there to be treated whether or not your wallet biopsy is positive.
- Sin Taxes: on Tobacco, Gorgonzola, Three-Liter Bottles of Liquid High-Fructose Corn Syrup, Tanning Clinics (Melanoma), et cetera: Sin taxes (and, perhaps, someday general revenues) pay for an army of barefoot doctors and nurses and mobile treatment vans roaming the country, knocking on doors, and providing preventive and other long-run lifestyle services for free: Let me examine your prostate. Mind if I check your refrigerator and tell you how to eat healthier? Have you exercised today? I'm a Pilates instructor, and we could do a session now? Are you up on your immunizations? Anybody here have a fever and need antibiotics? Come on out to the van and I'll clean your teeth." The idea is to make the preventive care cheaper-than-free, to insure that nothing with a high long-run benefit/cost ratio gets left undone because people would rather get a bigger check the next April to use to buy an HDTV.
- A Lot of Serious Research on Best Public-Health, Chronic-Disease, and Hospital Practices: Made easier, of course, by linking the payment records from the health branch of the IRS to hospital records to the wirelessly-transfered logs from the barefoot doctor vans.
- That's it. No deduction for employer-paid health expenses. No insurance companies.
Personally, I think the insurance companies will take a long time dying, but it's intriguing that so many different players have them in the crosshairs ...