Under ObamaCare, things will get even more arbitrary and unfair. Families will be required to have health insurance — either through an employer, the government or in a newly created health insurance exchange. Take a family earning, say, $30,000. If the family qualifies for Medicaid, the government will pay 100% of the cost. If the family qualifies for insurance in the exchange, the government will pay about 95% of the cost. But if the family is eligible for insurance at work, the government subsidy will equal only 15% of the cost. Families at the same income level can receive subsidies that differ by $10,000 or even $20,000.
Tax fairness means we are all treated the same.
Portability. Remarkable as it may seem, almost every state in the union prevents employers from helping their employees obtain the type of insurance they most want and need: portable insurance that travels with the individual from job to job and in and out of the labor market. The reason the states are doing this: misguided federal laws. ObamaCare will continue this strange and indefensible policy.
We should reverse course and encourage personal and portable insurance instead.
Patient Control. Roughly 24 million families are currently managing some of their own health care dollars in special savings accounts and a RAND study shows that employer plans cut costs by as much as 30% as a result. The rules governing these accounts are too restrictive, however. What is needed is a very flexible Health Savings Account (HSA) that can wrap around any health plan. In this way, individual choice and the marketplace would determine which expenses individuals will self-insure for in an HSA and which expenses will be paid by a third-party insurer.
Real Insurance. If health insurance were portable, the problem of pre-existing conditions would rarely arise. And the remaining problems would go away if health insurance worked like life insurance or casualty insurance. Specifically, people should be able to buy change of health status insurance. If you acquire a pre-existing condition and if you are forced to switch health plans, the current plan would pay the new plan any additional premium that is needed to reflect your higher health care cost. See additional explanation here .
Universality. In any system in which individuals are offered tax relief for the purchase of health insurance, some people will inevitably turn the offer down. What happens to the unclaimed tax credits? They should be made available to safety net institutions in the area where the uninsured live, so that money is available if the uninsured cannot pay their medical bills.
As I explained last week , this is a system under which money follows people. If everyone in Dallas County accepts the government tax credit offer and obtains private insurance, we do not need safety net institutions. The $8,000 family tax credits all go to pay premiums and deposits to HSAs. On the other hand, if everyone in Dallas County decides to become uninsured, the unclaimed credits all go to the safety net institutions.
This is a practical, realistic and workable form of universal coverage.
John C. Goodman is President of the Goodman Institute and a Senior Fellow at The Independent Institute. He is the author of the widely acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts.”