Martin Feldstein reads my blog

on Oct 08 in health care tagged by Trevor Hicks

OK, now he doesn’t of course. But his recent Op-Ed in the Washington Post echoes and improves up on the vague idea I sketched out last week for the government to get in the business of providing blanket catastrophic coverage for everyone and pushing individuals to bear the direct cost of their smaller decisions regarding health care and provide a loan facility to help those with costs beyond what they can easily afford and less than the catastrophic deductible. We borrow for houses, cars and education, I see nothing wrong with borrowing for health care when you think of it as an investment in your future ability to enjoy life.  Here’s Feldstein:

A good system should not try to pay all health-care bills. That would lead to excessive demand, wasteful use of expensive technology and, inevitably, rationing in which health-care decisions are taken away from patients and their physicians.

Such a system also keeps us on our currently unsustainable fiscal path. I think the Democrats don’t seem to understand that as much as we’d like to extend better health care and coverage to the poor, our government is already paying for more health care than we can afford. Adding to this burden without slashing benefits elsewhere just doesn’t make any sense. Her’s more:

Here’s a better alternative. Let’s scrap the $220 billion annual health insurance tax subsidy, which is often used to buy the wrong kind of insurance, and use those budget dollars to provide insurance that protects American families from health costs that exceed 15 percent of their income.

I like the 15% threshold rather than a hard dollar figure, we are already reporting our income to the government. This is a simple and efficient way to ensure that the benefits of this program are progressively means-tested. Skipping to the big finish:

The combination of the 15 percent of income cap on out-of-pocket health spending and the credit card would solve the three basic problems of America’s health-care system. Today’s 45 million uninsured would all have coverage. The risk of bankruptcy triggered by large medical bills would be eliminated. And the structure of insurance would no longer be the source of rising health-care costs. All of this would happen without involving the government in the delivery or rationing of health care. It would not increase the national debt or require a rise in tax rates. Now isn’t that a better way?

Simple and efficient usually leads to fair. This idea makes a real reform to the system rather than simply entrenching the existing status quo as the Baucus bill does. It achieves the primary goals of any reform which is to make health care available to all and to protect people from financial catastrophe caused by doctor bills. And it looks pretty low risk.  I’m on board.