Updated December 20, 2014
To the Republican Members of Congress
Looking into your plan for replacing Obamacare, I notice some major problems, which might explain why it doesn't seem to be generating much popular support.
First of all, it fails to get everyone covered, which makes it deficient in the minds of many, maybe even in the minds of a majority.
Second, it continues the very unjust policy of giving generous tax breaks exclusively to those who have healthcare benefits. Those without benefits have to pay more tax, income tax, Social Security tax, and Medicare tax.
Third, your plan fails to eliminate the perverse incentives created by tax breaks for healthcare, which have been driving up the cost of healthcare for decades. The burden of these higher costs also falls heavier on those without healthcare benefits.
Clearly, you need a better plan.
Maybe the time is right for a plan that covers everyone, is fair to everyone, and helps to control healthcare costs. You could propose such a plan, as follows:
1. The Patient Protection and Affordable Care Act of 2010 will be entirely repealed on January 1, 201X.
2. Beginning January 1, 201X every United States citizen under the age of 65 who is not covered by Medicaid will receive a health insurance voucher.
- The amount of the voucher will depend on the age and sex (and maybe the location) of the person receiving it.
- Health insurance and HMO plans that accept vouchers must accept all applicants who present vouchers and must charge the same for everyone of the same age and sex, except that discounts may be offered for certain wellness practices.
- Each plan that accepts vouchers must disclose the benefits and terms of the plan in a standard format that facilitates comparison between plans.
- Mandatory benefits should be kept to a minimum, so that freedom of choice and competition can work to provide the most valued benefits from the voucher funds available.
Increases in the voucher budget will be limited to the growth of the population and overall inflation, or to the growth of the economy.
4. Vouchers will be funded by (a) the elimination of all healthcare benefits (other than vouchers) for government employees and members of Congress; (b) the elimination of all healthcare-related tax breaks in the Internal Revenue Code; and (c) the elimination of all other "tax expenditures" in the Internal Revenue Code, except for a few that might be required for fairness or simplicity.
Tax rates will then need to be reduced, so that this plan will have a neutral net effect on the overall budget.
5. Medicaid will be retained until it is determined that it can be successfully incorporated into the voucher system.
6. Medicare will be reformed separately, with the goal of achieving results and costs at least as good as Canada's.
7. If it becomes clear over time that the voucher system is controlling costs and serving us better, then Medicare will be converted to the voucher system.
8. If it becomes clear over time that Medicare is controlling costs and serving us better, then the voucher system will be replaced by Medicare for all citizens.
Comments:
Universal healthcare coverage will be a great benefit to the economy. Employment-related costs will be lower. There will be more job mobility, less trauma from unemployment, less poverty, less welfare, and fewer bankruptcies.
Most “tax expenditures” probably do our nation more harm than good in the long run because they misdirect economic resources. They benefit special interest groups by increasing taxes on everyone else. Many of them (such as home mortgage interest and retirement-related tax breaks) are also very regressive. Eliminating "tax expenditures" will make the tax code much simpler, much fairer, and much more efficient.
Social Security and Medicare will both be strengthened by this plan because healthcare benefits currently not subject to Social Security and Medicare taxes will be replaced by wages that are subject to these taxes.
Very few regulations will be needed for the voucher system. The burden will be on the insurance companies and HMOs to prove their worth. They will have to serve us better than the reformed Medicare if they want to stay in business.
Health plans should be allowed to limit the amount they will pay for certain treatments, and to exclude some treatments entirely, to enable them to offer broader coverage or to reduce their prices.
There should be no restrictions on citizens of one state joining health plans in other states, assuming that they are willing to travel to the doctors and hospitals associated with the plan they join.
States should be encouraged to address tort reform (malpractice issues) to give their citizens more value from their vouchers.
