The President's health care proposal

Here is what the White House website identifies as the main features of the President's proposal on health insurance:

•Require insurance companies to cover pre-existing conditions so all Americans regardless of their health status or history can get comprehensive benefits at fair and stable premiums.
•Create a new Small Business Health Tax Credit to help small businesses provide affordable health insurance to their employees.
•Lower costs for businesses by covering a portion of the catastrophic health costs they pay in return for lower premiums for employees.
•Prevent insurers from overcharging doctors for their malpractice insurance and invest in proven strategies to reduce preventable medical errors.
•Make employer contributions more fair by requiring large employers that do not offer coverage or make a meaningful contribution to the cost of quality health coverage for their employees to contribute a percentage of payroll toward the costs of their employees' health care.
•Establish a National Health Insurance Exchange with a range of private insurance options as well as a new public plan based on benefits available to members of Congress that will allow individuals and small businesses to buy affordable health coverage.
•Ensure everyone who needs it will receive a tax credit for their premiums.

I wonder whether we need all of this. In particular, I wonder whether we need bullet points 2, 3, 5, 6, and 7.

If we took the alternative step of simply requiring employers to provide health insurance for their employees (subject to certain cost sharing), then we wouldn't need bullet point 2 (the tax credit) or 3 (government contribution to catastrophic health insurance). Businesses wouldn't be disadvantaged by offering health insurance because it would be a cost of doing business for everyone. Similarly, we wouldn't need bullet point 5 (the Wal-Mart tax) because all employers would be required to provide health insurance coverage. Bullet point number 6 would no longer be necessary because employees (and their dependents (again, subject to cost sharing)) would be covered under employer group health plans and low income individuals and families would continue to have the option of Medicaid. Bullet point 7 would also no longer be necessary--everyone would be covered (or could be covered) under either employer group health plans or Medicaid.

It just strikes me as wrongheaded and unnecessary to create another federal bureaucracy when the system would work better if the duty to provide health insurance were simply imposed upon the employer and the market was left to take care of everything else.

The Hawaii model isn't a bad one. The one danger I think it has is that it concentrates power in the hands of health insurers (again, including HMOs and Blue Cross/Blue Shield types entities). That is something to be avoided. They have the patients so they're in a position to control doctors' compenation. They have the doctors, so they're also in a position to control the care that is given. Not all of this is bad. But some of it can be.

John D'Amato, Saturday, February 28, 2009