Options for health care coverage reform

This topic has been reconsidered much as of late, so I thought I would do a summary post on some of the possible options.  I suspect I have covered all or most of this ground in 2009 or so, but here goes:

1. Universal health insurance vouchers on exchanges, with means-tested subsidies and also a mandate.  The logic of this can work just fine, but it is quite expensive as it would exist in the United States and we end up spending too much on health care.   Over time it would be accompanied by say a five percent VAT.

2. Single payer systems.  I don’t want to repeat the usual debates, but perhaps we can agree single payer won’t come anytime soon in the United States.  I also think they work least well in the land of medical innovation, and best in small countries such as New Zealand, but that consideration doesn’t even rise to the fore here.

3. The Singapore system, involving single payer for catastrophic expenses and health savings accounts for smaller expenditures.  To varying degrees you can combine this with forced savings for the HSAs and price controls on service provision, both of which you will find in Singapore.  Where “catastrophic” starts can vary as well.  This is my first choice, although if you wish to dismiss it as “utopian” for the United States you have a point.  I’ll get back to that.

4. One particular path for how ACA could evolve into a (relatively inefficient) form of a Singapore system.  Imagine that the mandate becomes fairly narrow with time, while at the catastrophic end insurance companies evolve into (inefficient) public utilities.  Health savings accounts are reintroduced through new legislation, perhaps under a Republican administration, and can be supplemented with cash transfers when desired.  Here is one discussion of that path.

5. The mandate and subsidized exchanges under Obamacare prove unworkable and eventually they are abandoned either partially or in full, or in some states but not others.  Their place is taken by a Medicaid expansion.  Coverage is not universal, though it is higher than pre-ACA, and of course coverage under the status quo is not going to be universal either.

6. The status quo of Obamacare.

7. More managed care.  We should remove the legal restrictions and barriers which penalized managed care in the first place, as it is a feasible and desirable means of bending the health care cost curve.  You will note that this option is not a strictly rival alternative to 1-6, but rather can be combined with them in varying degrees.  Still, it seems appropriate to list it as an option.

Now, if I am allowed to be utopian, I favor #3 over the status quo.  If I am asked to be less utopian, I see #4, #5, and #7 as some of the better versions of what ACA could evolve into.  I would not predict that those options come to pass, nor would I say those options are better than the rather unrealistic version of ACA as envisioned by its proponents, but I think they follow from the dictates of reality as the better options on the table, #3 aside of course.  And I do not feel I am being utopian in holding them as alternatives to the status quo.  They are not so far away from the status quo in the policy space.

I don’t think ACA in its current form is stable.  Too many moving parts, too many margins of danger, too many jerry-rigged incentives, too many “it worked OK in Massachusetts so it has to work at the national level even if it doesn’t appear to be maximizing” requirements, and too little recognition that the whole system is poorly geared for a world of stagnant median wages and rising inequality.  The higher is inequality and the lower are lower-tier wages, the harder it is to guarantee near-equal consumption of health care through employment institutions.  The greatest single danger to ACA is eventual massive employer-shedding of health care obligations, penalties or no, which at best evolves us into #1, which I do not favor.  On top of that there is state shedding of Medicaid obligations, which again pushes us into #1.  Most generally, the national health care systems which work are much more consolidated in nature than is the U.S. status quo.

It is a Denkfehler when people write “you don’t have an alternative to ACA” or “the Republicans don’t have a health care plan,” and so on.  You can take such pronouncements as leading indicators that ACA is not going well.  #3 aside, you can take the relevant alternatives as a mix of #4, #5, and #7.  Those are not so much alternatives “given by the Republicans (or whoever else),” as much as they are given by reality.  I don’t see “ACA as envisioned by its propnents” as on the table either, so in this sense it is also the Democrats who don’t have an actual health care plan.

I view the real choice before us as #1 vs. some mix of #4, #5, and #7.  And in that setting I do not favor #1 and I still can dream of and advocate #3.

Addendum: Here is my earlier post on how to debate health care policy.  Let’s see how many of its strictures you all violate.


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