Those of you who have been paying attention to Rep. Paul Ryan (R-WI, and my Congressman) know the main parts of his ideas on health care. At the Hoover Institute today, he added a new twist – a full shift of the tax credits from the employer to the employees. You can read the speech or listen to it and a question-and-answer session…
I’ll give some highlights, along with the obligatory commentary:
Today, I will attempt to make the case for optimism. Specifically, I come bearing three pieces of good news.
The first piece of good news is this: The urgent need to repeal and replace the President’s health-care law, coupled with the urgent need to deal with the drivers of our debt, will present us with an unavoidable time for choosing, allowing us to confront health-care inflation head-on.
Ryan isn’t counting on the Supreme Court using the lack of severability in PlaceboCare to overturn the entirety of it by finding the individual insurance mandate unconstitutional, even though it is likely the Supreme Court will decide on that in the next 9 months (hmmm, what else in the health care field takes 9 months?). Instead, he’s not letting this crisis go to waste.
…And yet, across the federal landscape, choice and competition are undermined by poorly designed programs and tax policies.
In Medicare, the government reimburses all providers of care according to a one-size-fits-all formula, even if the quality of the care they provide is poor and the cost is high. This top-down delivery system exacerbates waste, because none of the primary stakeholders has a strong incentive to deliver the best-quality care for the lowest cost.
If you’re using Medicare, good luck finding a doctor because of this.
In Medicaid, a flawed federal-state matching formula is blowing out state budgets. There is no limit on the federal government’s matching contributions to state spending, so state governments spend most of their energy devising ways to maximize how much they can get from the federal government, rather than focusing on delivering high quality, cost-effective coverage for their most vulnerable citizens.
A prime example is former governor Jim “Craps” Doyle’s (WEAC/HoChunk-For Sale) increase in the hospital bed tax. It was sold as allowing Wisconsin to suck more money out of the federal teat.
Beyond these two programs, our current tax code provides additional fuel for runway health care inflation. Under current law, employer-sponsored health insurance plans are entirely exempt from taxation, regardless of how much an individual contributes to their policy.
This tilts the compensation scale toward benefits, which are tax-free, and away from higher wages, which are taxable. It also provides ways for high-income earners to artificially reduce their tax-able income by purchasing high-cost health coverage – which in turn can fuel the overuse of health services.
There’s countless examples of people taking and hangong onto jobs they don’t really want, or not taking jobs they’re suited for, just because of the presence of or lack of employer-sponsored health insurance. Elsewhere in the speech, Ryan pointed out the current scheme of insurance decouples the amount visibly paid to the proviers from the actual cost.
