Three Solutions to the Healthcare Crisis – Part II


Solving the ObamaCare healthcare system crisis will not be easy. The American Health Care Act (AHCA) proposed by Republicans failed to garner enough support even within the Republican Party for approval.

Chris Conover, Duke University professor, suggests there are three possible solutions to this dilemma:

  • Universal Catastrophic Coverage
  • Universal Safety Net
  • Responsible Federalism

In Part I of this series I discussed the first of these three possible solutions, Universal Catastrophic Coverage, and today we’ll discuss the last two.

Universal Safety Net

A Universal Safety Net offers the possibility of a bipartisan reform that is politically feasible at an affordable cost. Conover says there are two possible ways to achieve this: Individual Pay-Or-Play and CHC Expansion.

Individual Pay-Or-Play

Economist John Goodman proposed this approach and it would entail eliminating the tax exclusion in favor of universal tax credits. Currently there is a tax exclusion that affects those who receive their health insurance policies through their employer that does not apply for those who purchase theirs on their own.

Goodman’s idea is that whatever subsidy we are willing to provide to the uninsured to secure coverage ought to be channeled into funding the safety net in the case of individuals who opt to go without coverage. He would eliminate the Individual Mandate or even auto-enrollment of those without coverage but the safety net would automatically receive the resources needed to care for those without coverage.

CHC Expansion

Community Healthcare Co-ops (CHC) provide basic primary and preventive care for millions of Americans. Expansion of these CHCs is an idea originally proposed by President Bush. Just as the Emergency Medical Treatment and Active Labor Act (EMTALA) was passed over thirty years ago to ensure that the uninsured would not be turned away at emergency rooms, expansion of CHCs could provide a nationwide network to ensure the provision of primary and preventive care for the uninsured who are ineligible or fail to enroll in Medicaid.

A Universal Safety Net would ensure adequate healthcare for all Americans at an affordable cost. Those with greater resources could afford to purchase more comprehensive coverage. This may seem a modest achievement but it could form the foundation of healthcare reform until a more comprehensive approach is politically feasible.

Responsible Federalism

The third possible solution proposed by Conover is called Responsible Federalism. In simple language it means giving the states the freedom to devise their own healthcare system.

Medicaid is already a federalist system, combining federal government support with state support to meet the needs of state residents. With federal approval, states may devise their own unique ways to administer the system that better meets the needs of their people. Conover believes that “responsible federalism in health care would entail reforming the perverse fiscal incentives embedded in Medicaid while also offering states much greater flexibility to solve their health problems with the heavy hand of Uncle Sam.”

With the ObamaCare expansion of Medicaid, the cost of administering this program is steadily rising. In 2015 it rose 9.7% to $545 Billion. Part of the reason for this skyrocketing expense is the perverse incentives of the system. It encourages wasteful spending and discourages states from economizing. Under ObamaCare these incentives have been greatly exaggerated: states that save $1 of Medicaid funds get to pocket only 10 cents while states that waste $1 pay only 1 dime more.

The formula encourages states to expand their programs as much as possible, knowing that a majority of the cost will be exported to neighbors (federal taxpayers). A better system would cap federal Medicaid contributions using a per capita amount that varies by type of eligible (disabled people spend more than children).

Federalism has often referred to the states as “laboratories of democracy.” Responsible Federalism would allow states to come up with their own ideas for healthcare that fit the needs of their people. Blue states, like California or New York, might test-drive single-payer healthcare that liberals believe is the solution. More conservative states like Indiana or Kansas might well prefer the much less expensive approach of universal catastrophic coverage or universal safety net.

In a few years the data would be available to compare these different systems so we could all benefit from their experience. Conover sums up: “The federal role could be limited to providing a fixed amount of dollars per citizen (the amount varying depending on whether they were poor, elderly, a near-retiree or a child) and letting states tax their citizens as desired if the basic federal contribution is viewed as insufficient to provide the type of health care desired for that state’s citizens.”

There is an old saying in the political world that “all politics is local.” With this system it would be “all healthcare is local.” The type of healthcare system you live under would be determined by your state representatives, not which party occupies the White House.

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