A bit over a year ago, Brad DeLong (who is a doctor but not a medical doctor) proposed “An Unrealistic, Impractical, Utopian Plan for Dealing with the Health Care Opportunity,” the crux of which is:
20% Deductible/Out of Pocket Cap: The IRS snarfs 20% of your family economic income. 5% of it is an increase in taxes (but that replaces your and your employer’s current health insurance premiums). 15% of it goes straight into your Health Savings Account. That HSA is then used to pay all your family health bills. If your expenses in a year are less than what’s in your HSA, the balance is rolled into your IRA (or, if you prefer, returned to you with your tax refund check).
Single-Payer for the Rest: If your HSA is emptied and you still have more health bills that year, the federal government pays them. The main point, after all, is insurance: if you fall seriously sick, you want right then and there to be treated whether or not your wallet biopsy is positive.
Sin Taxes: on Tobacco, Gorgonzola, Three-Liter Bottles of Liquid High-Fructose Corn Syrup, Tanning Clinics (Melanoma), et cetera: Sin taxes (and, perhaps, someday general revenues) pay for an army of barefoot doctors and nurses and mobile treatment vans roaming the country, knocking on doors, and providing preventive and other long-run lifestyle services for free: Let me examine your prostate. Mind if I check your refrigerator and tell you how to eat healthier? Have you exercised today? I’m a Pilates instructor, and we could do a session now? Are you up on your immunizations? Anybody here have a fever and need antibiotics? Come on out to the van and I’ll clean your teeth.” The idea is to make the preventive care cheaper-than-free, to insure that nothing with a high long-run benefit/cost ratio gets left undone because people would rather get a bigger check the next April to use to buy an HDTV.
A Lot of Serious Research on Best Public-Health, Chronic-Disease, and Hospital Practices: Made easier, of course, by linking the payment records from the health branch of the IRS to hospital records to the wirelessly-transfered logs from the barefoot doctor vans.
Matt Yglesias summarized it by adding two elements a month ago and E.D. Kain gives it his qualified endorsement this morning on the grounds that “adding health savings accounts (and thus direct, personal involvement) into the mix is a really good idea at containing costs.”
But the cost savings incentive would be rather marginal. There’s no concern at all for health care costs if Uncle Sugar is going to pay for any excess spending. That means the only personal incentive is the ability to take deferred savings and put it into one’s retirement account and draw upon it some decades hence. Given how little we save for own own retirement (beyond that which is forced upon us by FICA taxes) I’m unconvinced that’s a very powerful incentive.
