The media have caught the president redefining Obamacare success downward. But, try as he might, voters won’t consider a hugely disruptive and expensive program to benefit just a sliver of patients a “success.” They soon will ask if there is not a better way, without wreaking havoc on the previously insured, to cover those who’ve managed to fight through the HealthCare.gov thicket and for those for whom the Obamacare standard plan is hardly “affordable.”
There certainly is. In a critically important piece, George P. Shultz, former Secretary of State, John Cogan, former deputy director of the U.S. Office of Management and Budget, and physician Scott W. Atlas make the case for getting back to actual health insurance, as opposed to massive pre-payment of health-care expenses:
Insurance is about protecting against risk. In the health arena, the risk at issue is of large and unexpected medical expenses. The proper role of health insurance should be to finance necessary and expensive medical services without the patient incurring devastating financial consequences.
Over the last decade, however, Americans have come to expect their health insurance to subsidize the consumption of all medical care. Rather than simply protecting against financial catastrophe, insurance has become a pass-through mechanism to pay for every type of medical service, including routine ones.
This shift in expectation has meant that health insurance stands out as entirely different from all other types of insurance. Ask yourself: Would you use automobile insurance to buy gasoline? Would you use homeowner insurance to finance painting your house?
This wrongheaded view has played an important role in contributing to rapidly rising healthcare costs. Patients with insurance do not perceive themselves as paying for the cost of routine services, nor do their physicians and other healthcare providers. The natural result has been a more-is-better approach, with patients and doctors embracing costly healthcare services that are often of little value to the patient. Given healthcare’s crucial role in well-being, it is important to assist individuals who can’t afford even routine medical expenses, but it shouldn’t be done through hidden insurance subsidies.
The solution is to encourage use of what the president calls “cruddy” plans, but are in fact affordable and closer to true insurance:
One attractive option for insuring those in need would be to expand the use of high-deductible health plans in combination with health savings accounts. This approach provides a cost-effective vehicle for insuring against catastrophic medical expenses while simultaneously helping individuals defray the costs of routine medical care.
Such coverage protects individuals from losing a lifetime of assets and from the devastating consequence of financial bankruptcy due to unpaid hospital and associated medical bills, a contributor to financial stress for millions of Americans every year. Such coverage means less-costly insurance policies, since they cover only major expenses and thereby reduce the bureaucracy and expense of smaller claims. And, with high deductibles, the hidden prices of medical care become far more visible, a necessity for containing costs. Price transparency coupled with greater availability of accurate information on health outcomes and provider quality are essential if patients are to choose healthcare services based on value.
There is no individual mandate and, hence, no dictated level of insurance, which, thanks to Obamacare, actually encourages more health care use (you might as well use it since you paid for it).
Is it too late to redefine health insurance expectations , making the true cost of insurance felt by users of health care? Conservative health-care expert Yuval Levin tells me it isn’t. “It could be a gradual move advanced by giving everyone a credit sufficient for the purchase of catastrophic coverage. People who wanted more comprehensive coverage would pay the difference (as they do now), but everyone would have access to at least catastrophic coverage at no out of pocket cost,” he emails.
This is the essence of health-care proposals made by Levin and American Enterprise Institute’s Ramesh Ponnuru and by James Capretta and Robert Moffit. The idea of a fixed credit to cover at least catastrophic care could be used, as Capretta points out, in Medicaid reform. (“In replacing Obamacare, policymakers should move lower-income people out of the limited sphere of Medicaid options and into the same private health-insurance markets in which their fellow citizens purchase coverage. This change would afford these patients greater access to doctors and specialists, and would reduce the disincentive to higher-paying work. . . . [One] approach would give Medicaid recipients the same federal tax credit that workers would receive in a reformed marketplace for health insurance. The federal government could then convert Medicaid into a per-person allotment to the states, funded through a block grant, that would supplement the base credit for a state’s low-income residents.”)
Obama has it exactly backward. He wants to mandate a high level of coverage to pay for ordinary health-care expenses, which makes the cost of health insurance expensive and deters young, healthy people from participating. That exorbitant cost ultimately is shouldered by taxpayers in the form of higher taxes, which slows down the economy. Instead, we should be making cheaper insurance more widely available, encouraging patients to be stingy consumers and allowing a variety of insurance products to be offered in the free market.
Maybe we should have come to expect this from Obama: When in doubt, the answer to most policy problems is to do the opposite of what he wants.