Posted on 06/30/2012 7:14:32 AM PDT by Kaslin
When Barack Obama was a candidate for president, he endorsed universal health insurance, but opposed forcing individuals to buy their own insurance.
As president, he signed into law a bill that violates both of these promises. The Affordable Care Act (ObamaCare) gives the federal government the authority to tell every American what insurance they must have, where they will get it and what they will pay for it. Moreover, even as it violates another campaign promise ("if you’re in a plan you like, you can keep it"), the most optimistic estimate expects 23 million people will remain uninsured once the new health reform law is fully implemented.
Now that the Supreme Court has declared the mandate constitutional, what’s next? Mitt Romney says "repeal and replace." But what should we replace ObamaCare with? Republicans on Capitol Hill are being way too timid. They are endorsing only modest reforms that will not solve the more fundamental problems of cost, quality and access to care.
Here is my suggestion: Return to the two original ideas Obama said he was for: universal coverage without a mandate. How can that be done? Ironically, the first step is to consider a health policy idea proposed by Obama's presidential opponent, John McCain.
The Current System . Most people who purchase private insurance today benefit from federal tax subsidies that total about $300 billion a year. Yet the system is completely arbitrary and unfair. The amount of tax subsidy any particular individual receives depends upon whether the insurance is obtained through an employer, what options the employer offers, the family's tax bracket, and other factors. For a middle-income family facing a 25 percent federal income tax rate, a 15.3 percent Federal Insurance Contributions Act (FICA) tax and a 5 percent state income tax rate, the ability of an employer to pay premiums with pre-tax dollars is a subsidy worth 45.3 percent. Government is efficiently paying almost half the cost of the insurance.
Because the amount of subsidy depends on the employee’s tax bracket, the largest subsidies are given to people who need them least. In addition, the system encourages waste. The more expensive the insurance, the larger the subsidy. Also, since most of the uninsured do not have access to employer provided coverage, they get little or no tax rebate when they purchase insurance on their own.
Our system for taking care of the uninsured is also arbitrary and unfair. Although no one knows the exact number, it appears the uninsured pay about half the cost of the health care they receive from their own resources, leaving the other half as unpaid bills. Yet how much help people get depends on where they live, how many other uninsured patients are also seeking care and how much hospitals get from federal, state and local governments.
Under ObamaCare, tax and spending subsidies for private health insurance will become even more arbitrary and unfair. For example, a family earning just over$30,000 a year will get no additional tax relief for employer provided insurance. Yet the government will pay as much as 95% of the premium if the family gets insurance through a health insurance exchange. In the latter case, the family can get $20,000 more help from the government in some cases.
A Better Way . Suppose the government offered every individual a uniform, fixed-dollar subsidy for the purchase of health insurance, say $2,500 for every adult and $1,500 for every child. A two-adult, two-child family, then, would get $8,000. The credit would be refundable, so that it would be available even to those with no tax liability. This was essentially John McCain's proposal in 2008. The idea was also included in legislation proposed by Sen. Tom Coburn (R-Okla.), Rep. Paul Ryan (R-Wisc.) and others.
To make the arrangement universal, however, one more step is needed.
If an individual chooses to be uninsured, the unclaimed tax credit should be sent to a safety net agency in the community where the person lives — in case he generates medical bills he cannot pay from his own resources.
To implement the program, all the federal government needs to know is how many adults and how many children live in each community. In principle, it will be offering every adult an annual $2,500 tax credit. Some will claim the full credit. Some will claim a partial credit (because they will only be insured for part of a year). Others will claim no credit. What the government pledges to each community will be $2,500 times the number of adults and $1,500 times the number of children. The portion of this sum that is not claimed on tax returns should be available as block grants to be spent on indigent health care at the local level.
Suppose that every adult in Dallas County chose to obtain private insurance, relying on a refundable $2,500 federal income tax credit to pay the premium. As a result, Dallas County no longer would need the money that previously funded safety net medical care. These funds could be used to fund the private insurance premiums, instead.
On the other hand, if all the adults in Dallas County changed their minds and opted to be uninsured, the $2,500 unclaimed credits would be available for safety net institutions.
Where would the federal government get the money to fund this proposal?
We could begin with the $300 billion in tax subsidies the government already "spends" to subsidize private insurance. Add to that the money the federal, state and local governments already spend on indigent care. For the remainder, the federal government could make certain tax benefits conditional on proof of insurance. For example, the $1,000 child tax credit could be made conditional on proof of insurance for a child. For middle-income families, a portion of the standard deduction could be made conditional on proof of insurance for adults. For lower-income families, part of the Earned Income Tax Credit (EITC) refunds could be conditional.
Is an $8,000 refundable tax credit for families adequate? The typical employer plan these days costs twice that amount. But in almost everyone's estimation the typical employer plan is buying a lot of wasteful and unnecessary care. The $8,000 would pay for core, catastrophic insurance that we want everyone to have. Any additional coverage purchased by employees and their employers would have to be made with after tax dollars.
Every dollar spent on additional insurance would be an unsubsidized dollar. It would be a dollar that would otherwise be take-home pay. Given this new subsidy structure, it is highly likely that insurers would begin offering plans that cost $8,000 or close to it. Of course, these plans would have fewer options than the typical employer plan today.
To complete the idea of "uninsured coverage," I would offer one other suggestion. Let Medicaid be open to everyone. That is, let families use their $8,000 tax credit (plus some additional amount contingent on family income) to buy into Medicaid. At the same time, let everyone currently on Medicaid have the opportunity to leave the program and apply their Medicaid dollars to private insurance.
Bottom line: we can have a reasonable system that provides basic coverage to everyone without dictating what insurance people have to have, where they must get it and what they have to pay for it.
I prefer "repeal, behead, stake, burn and bury" so that the idea can never rise again.
The ONLY acceptable course is to rid Washington of ALL RATs and RINOs, then REPEAL ObamaCair.
“Replacing” this assault on our freedom and liberty is not an option. The Federal Government has intruded into far too many areas where they have no legitimate concern and must be turned back.
The time to repudiate Big Government and the Nanny State is long over due.
Agreed! Hannity had a caller on Thursday that tried to explain the need not to replace and Hannity filibustered the segment so the guy could not explain the point.
The number one reason for the cost of medical cots today IS government. Get them the H out of it altogether and let the free market decide what works best. Sean is still stuck in that big government RINO mentality no matter how much he tries to tell us he is a registered Conservative and not Republican.
One has to ask, just what does that mean coming from the State of New York?
“Repeal and Replace” is Romney Republican-speak for “we can do socialism better than Obama.”
The insurance companies stand to make huge money when everybody is forced to buy a huge policy. If the RINOs try to mend this, all they will do is replace the bits that eventually price folks out of the insurance policy into the governments hands.
These people are just as bad as the Democrats!
Term Limits Now!!
If everyone gets an 8k subsidy then why not just have everyone PAY THEIR OWN BILLS AND KEEP THE GOVERNMENT THE HELL OUT OF IT.
WE MUST HAVE TERM LIMITS.
There is a problem with this and that’s the possible parallel with student loans. What’s happened to the cost of higher education? Instead of being more affordable, loan guarantees have assured massively higher debt levels for students who may or may not graduate.
I agree completely with term limits, but to throw all of them out is going to far. How do you know what the next bunch will do. They can promise you all kinds of things, but once they are elected will do what they want and not what they promised. I have found that would works for me is to choose the one that promises the least
FOOL. Damned Fool.
California has had term limits for 20 years. Tell me again how term limits made the state into a paradise of responsive and responsible government.
Legislative term limit DO NOT WORK. The ONLY term limiter that matters is the ballot box. Get enough people to agree with you and you can limit any congressman or senator to one term if you want.
Term limits fail because you get different faces with the same ideology along with no institutional memory. The lobbyists and the bureaucrats are everlasting and the unweaned elected officials are hapless, even willing, pawns.
Term limits provide the illusion of a change agent that is false, phony, fraud.
"I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents."-- James Madison, the father of the U.S. Constitution
Just out of curiosity, what's happened to the voter demographics in Cali. during that same time period?
Rodney will give us some Obamacare Lite monstrosity instead.
Ultimately no term limits does seem to be the logical choice but right now we are screaming at the tops of our lungs and our own side is just doing whatever they want. Why because the other side is even worse so they have no fear of losing their office. If people start talking term limits they may start listening and stop the deceptions.
Just look at this proposal. 8K subsidy for every family, even ones that pay no income tax! Does Paul Ryan and his buddies have a magic money tree that we don't know about? If everybody gets a subsidy, who PAYS the subsidy? And why could we not just change that figure from 8k to say 5 million and we can all just retire?
Sorry for the ranting but these people are just maddening.
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