August 13, 2009

Free Market Healthcare

The one great thing about shouting at healthcare town halls is that Boring Health Care Legislation has suddenly become a Riveting Heath Care Debate.

The American public is suddenly paying attention. Does that mean we have a chance to legislate the best-policy-plan instead of than the plan that has the most moneyed interest groups supporting it?

What is the best plan?

A Bipartisan Plan

Many thoughtful commentators and analysts seem to say that the best health reform proposal is the bipartisan Wyden-Bennett healthcare bill.

Wyden-Bennett is the best kind of work that can be done in the American Congress. The bill has been crafted over the last two years with the sponsorship of a wide range of Democratic and Republican senators. The bill is responsibly revenue-neutral (as scored by the CBO), provides 99% of Americans with good coverage even if they get sick or lose their job, and simplifies life for businesses. The plan accomplishes this all though competition of private insurers, with no big government-run insurance plan.

The Wyden-Bennett idea is to let consumers actually choose their own health insurance freely, instead of restricting them to their employer's menu of plans.

To get employers out of the business of fiddling with the health insurance of their employees, the bill phases out the employer payroll tax deduction for health insurance, and replaces it with direct tax subsidies for consumer-purchased health insurance.

Not Government-Run

An array of unregulated insurance plans would be hard for consumers to understand without some standardization. But instead of providing standards through a government-run insurance program, Wyden proposes that private insurance should be policed by government insurance regulators.

The new regulators would have two main roles. Firstly, they should require that health insurance plans all meet a basic level of coverage. And secondly, the regulators should collect and disseminate easy-to-compare information about the different plans. The proposed regulators are organized as state-wide agencies called "HHA"s.

The proposed structure of a regulated market sounds very similar to the American stock market, regulated by the SEC, or the American drug and food market, regulated by the FDA. You are not allowed to sell stock in a ponzi scheme, or sell food with toxic bacteria. You must file quarterly financial reports and stamp Nutrition Facts on your product.

And so under Wyden-Bennett, health insurers would not be allowed to sell scam insurance that abandons you when you're sick, and they must participate in a common open enrollment period during which the HHAs will make it easy for us to choose and change our insurance.

Preventing Insurance Leeching by Mandate

In exchange for increased regulatory scrutiny, the health insurers do get a boost for their business: under Wyden-Bennett, all people are required to buy health insurance. Americans can choose any private insurance plan they want, but they are required to buy something. Just as you are required to buy liability insurance if you drive a car.

The reason for the requirement, of course, is that even if you are uninsured, the reality is that health providers do end up paying for your care when you stumble into a hospital's emergency room sick. Collecting basic premiums and paying for a doctor's visit before you get so sick is fairer and cheaper for everybody.

A Great Plan With No Special Interest Support

The problem with the Wyden-Bennett plan, apparently, is that it is opposed by big unions and big insurers who are happy with the current state of lightly-regulated workplace-tied health benefits.

Without the support of the powerful interest groups on both the Democratic and Republican side, the Wyden Bennett plan seems to have been written off even though it is so consumer-friendly.

But now, with all the shouting about healthcare on TV, the American public is paying attention. Maybe the future of the legislation does not have to be determined by public interest money after all. Maybe, through all the mobilization of town-hall-attenders and letter-writers and bloggers and tweeters, the froth of popular attention will raise the profile of the voices of reason.

Maybe Wyden-Bennett has a chance?

For Wonks: more on Wyden-Bennett from the Center on budget and Policy Priorities, here.

Posted by David at August 13, 2009 09:28 PM
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