I’ve been meaning to flesh this post out some more… since October. Instead of holding it up any longer, I’m going to release the draft version (right down to references to Presidential Candidates)…
Both Candidates for President have health care proposals (Obama and McCain). But, the genesis for this blog was an idea for a way to provide health insurance for everyone. We have a fairly straight forward program called the Earned Income Tax Credit that helps workers at the bottom of the income scale. The same concept can be applied to health care. At it’s core, the Federal Government would provide assistance to pay for health insurance based on income. The less people make, the larger the assistance.
Beyond providing assistance, the Federal Government’s would carry out several functions. First, the Government would set minimum guidelines for coverage. Second, the Government would monitor the insurance provider to prevent abuses. Third, the Government would require participating companies to write policies on all comers regardless of pre-existing conditions. More on that last point in a moment.
Fourth, the Government would provide a website that would allow the public to locate insurers, compare prices, post comments about insurers and file complaints. In many ways (besides the fact the Government would not be making money off of it), it would resemble an Amazon.com for the health insurance market.
The Government would not dictate absolute prices on policies. If the program is structured properly, the market should manage prices quite nicely.
It would probably make sense for insurers to have a second category of policy for high-risk individuals. If that were allowed there would have to be standard rules on what qualified as a high-risk individual, the amount provided to the individual by the federal government would be adjusted upward and, most importantly, the price of high-risk policies would have to be within a certain multiplier of the price of a standard policy. In essence, insurers would be incentivized to take on high-risk individuals because they would both receive higher payments and have access to a large pool of customers that they would otherwise not be able to access.
Of course, the plan would have to be structured so that employers would be encouraged to continue to provide health insurance. Existing tax benefits to employers should be maintained. Employers that choose to not provide insurance could possibly be taxed in proportion to worker’s salaries. Thus, an employer with mostly low wage workers (and presumably a very low profit margin) wouldn’t be penalized for the business they’re in. Conversely, companies with primarily high salary employees for which health insurance is (relative to salaries) a small cost would have an incentive to continue to provide health insurance for their workers.