|Republicans undermine their own long-term interests by supporting elimination of the Cadillac Tax. The GOP opposes government-imposed cost controls, and supposedly favors market-driven discipline as an alternative. Most GOP members in Congress fail to understand that the Cadillac tax is a market-driven reform. Currently, federal tax law confers an open-ended benefit on employer-paid premiums, which are exempt from income and payroll taxes. The more a company spends on health benefits, the greater the tax subsidy. The result is higher-costs than would exist if the tax subsidy were limited, as the Cadillac tax does.|
The central unanswered question in the U.S. health system is how to discipline costs. The choice is between reliance on regulatory controls put in place by the federal government or injection of stronger financial incentives for consumers into the markets for medical services and insurance. Currently, the U.S. has a mixed public-private system with pricing controls applied to payments made by public insurance, and markets that function poorly because they are hobbled by misaligned incentives, some of which are caused by government policy. The result is widespread inefficiency. Credible estimates put the amount of wasted spending at about one-third of total costs.
|Direct primary care (DPC) is fast becoming an accepted alternative to fee-for-service payment in the private market, but it has yet to find its way into Medicare. Over two-thirds of Medicare beneficiaries have two or more chronic conditions. This is a population that would benefit greatly from high quality primary care, but the program is still built on the fee-for-service model of payment, which creates barriers to low-cost, frequent communication between physicians and their patients.CMS could test ideas like DPC to see if they can deliver better care at a lower cost to the Medicare population. |
The Democratic party is moving steadily toward a full embrace of Medicare for All as its official health-care policy. While the term is flexible enough to mean different things to different people, the overall direction is clear enough. The party is advocating for the enrollment — eventually — of all Americans in a government-run insurance plan of some sort.
The scope of what can be changed under section 1332, at least in theory, is impressive. While states can’t alter the ACA’s protections for people with pre-existing conditions, or allow insurers to deny coverage or charge higher premiums to consumers with high expected health costs, they can:
- use federal funding for the premium tax credits payable under the ACA to provide subsidies to individuals in a different manner;
- alter the essential health benefit requirements of the ACA;
- change other ACA insurance rules; and
- terminate the ACA exchanges while building new mechanisms for establishing enrollment in health coverage.
Some years back, I concluded that single-payer health insurance would profoundly alter America’s financial structure, but change the country’s health care relatively little. This thesis is reinforced by the strident, bipartisan emotionalism aroused by a new study by my colleague, Charles Blahous.