Ed's Healthcare Plan

The Republicans have their Obamacare replacement plan now. There's some good, some bad, and plenty of "why bother" in it. But I am not here to go over their plan, which will work a little better than Obamacare, but still fail for the same reason.

My big complaint about healthcare has always been the third party payer problem: When people don't pay their own expenses, those expenses rise under the "tragedy of the commons" economic theory. People overuse services they don't have to pay for, creating more demand, and thereby creating higher costs. We have seen it in everything from healthcare to education. As long as government, or an insurance company, or my employer, or anyone else pays for it, we as individuals don't care how much we use or how much it costs. Why should we care?

Anyone with a lick of sense will know the answer: Inevitably, we pay the costs ourselves, through tax dollars, insurance premiums, lower salaries, and various other means economies extract value from us.

We WILL pay for healthcare ourselves, eventually. But for the stupid people amongst us, we need that cost to be as direct as possible, because they otherwise won't understand they have to pay for it. Ironically, the age old "you pay the doctor when you see the doctor" is the best method. And that should be the primary payment means now.

Of course, there are some medical procedures which are too costly for most people to pay out-of-pocket. There are two simple solutions for all of these:

1. Health Savings Account: I still believe this is one of the best ideas ever. In fact, I would love to see it treated like an Individual Retirement Account, where the money can be saved tax-free (although I'd prefer dumping the income tax system anyway) and even invested over a life time, but still allowed for out-of-pocket medical costs at any time during your life. I will note that it is the one part of the Republicans' plan I like. 

2. Health Insurance: By "health insurance", I mean REAL insurance, and not the third party, check-writing service that health insurance has become. Health insurance should only cover catastrophic health events, such as major surgery needed to either save one's life, or save one's quality of life (i.e. hip replacement). It should have a minimum $5,000 per event, or $10,000 per year deductible, and it should work in conjunction with the HSA. If $10,000 in out-of-pocket medical expenses is exceeded in a year, the health insurance should automatically kick in. For specific medical events, that should be dealt with between the doctor and the insurance company. By the way, these limits should increase every year based on inflation.

This should be the standard for both public (Medicare/Medicaid) and private health insurance. Any other "situations" (such as long and short term disability) should be handled separately from public or private health insurance, or handled within the system as is.

In addition...

3. No more tax deductions: I am against income taxes anyway, but why should we allow tax deductions for healthcare? You do realize that wealthy people can afford more and better healthcare than poor people, regardless of insurance? Allowing tax deductions for healthcare is just another way the rich get out of paying taxes. While we are at it, let's end the corporate deduction for health insurance also (sorry, but you have to pay for your own health insurance, like you pay for your own groceries). 

4. Coverage crosses state lines: All health insurance is accepted at all doctors and hospitals. With the HSA/health insurance combo, all you have to do is present a special debit card at the doctor's office/hospital. No longer do doctors or hospitals need extensive staffs to process insurance claims. One credit card reader will do the trick. It saves money for both doctors and patients. 

5. States only license doctors and regulate businesses: States can only license doctors and regulate doctors and hospitals as they would any business. They CANNOT target doctors and hospitals with regulations that do not apply to other businesses within the state. Also, medical licensing cannot be prohibitively expensive. In other words, no more protecting existing medical practices at the expense of doctor availability to the public, which helps keep costs high for existing doctors.  

6. More new doctors: The more doctors we have, the lower medical costs go. Eliminate any regulations which cap the number of doctors graduated from medical schools.  

Admittedly, there are plenty of other good ideas that could be added to this (medical malpractice reform anyone?), but I consider this a good start. I don't expect this to be wildly popular, but I consider this a valid compromise between libertarian and more statist ideologies, while still allowing for a more free market approach to healthcare.