Tuesday, July 21, 2009

Fixing Healthcare While Keeping Capitalism

There is a reasonably simple solution to health care that I have not heard yet (in it's entirety from one source)

1) limit mal-practice settlements to the cost of correction and wages missed*.

2) Tax employer sponsored plans as ordinary income.

3) Allow Health Savings accounts to have pre-tax contributions and tax free withdrawals for health related expenses. (this is how it works today)

4) Mandate that all citizens have health insurance. Nothing fancy, just minimum protection for catastrophic injury. This also requires that certain states change their laws regarding minimum coverage that insurance provides to allow for the minimum coverage.

5) Incent employers to provide health insurance for employees by offering a tax reduction of x% of their marginal rate if they provide at least the minimum plan and an HSA.

eg. If the reduction was 5% and the employer was in the a 30% top marginal tax bracket the employer would pay 25% on income over the level where 30% is to be in effect. This reduction in tax paid by the employer would be calculated to be equal to the new tax generated by the tax on employer sponsored plans.**

These measures would encourage employers to provide high deductible plans with attached HSAs. The nature of these plans would require that there are no green lists of doctors who accept only certain plans allowing people to shop their treatment, causing greater competition within the health care arena. Another useful provision would be to change the way doctors are compensated to be more results oriented unfortunately I am not sure exactly how to do this. I would like to ask a doctor how this could be done.

*Use a formula based on the individual's education, and career level

** The actual percent reduction would take a lot more calculation than I can muster at 11pm.