A Better Way to Cover Americans


With the State of Rhode Island writing ObamaCare into state law with this year’s budget, it’s worth noting a proposal floating around in conservative circles and the Trump Administration, as Avik Roy articulates here:

Last week, the White House finalized a new rule that allows employers to fund health reimbursement arrangements (HRAs) that can be used by workers to buy their own coverage on the individual market. This subtle, technical tweak has the potential to revolutionize the private health insurance market. …

The administration estimates that as many as 800,000 employers — mostly smaller businesses — will choose this option, expanding health care choices for 11 million workers in the next decade. These employers will benefit from having fiscal certainty over their health expenditures. And workers will benefit from being able to choose their coverage and take it from job to job.

This is the health-care-market fix for which I’ve been advocating for years.  Everybody would get accounts, and employers could put money into them for their employees.  So could the government, as welfare benefits, and so could charities.  So could parents or even concerned members of a community after some surprise accident or illness for a neighbor.

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At the same time, eliminate most mandatory coverages for health insurance so people for whom it makes sense can buy catastrophic coverage inexpensively.  That way everybody is covered for emergencies and nobody ever has a preexisting condition, because everybody has always had some sort of coverage.  At the same time, Americans would be better able to make health care decisions because they’d more often be paying directly for the services they receive and doing the cost-benefit analyses that people several steps removed from their situations can’t possibly do.

Of course, under such a system politicians attempting to buy votes would have to be more direct about it.  They’d be limited to transparently depositing taxpayer money into accounts instead of implicitly driving up costs in our opaque system by requiring insurers to cover certain benefits.  But in a fair analysis, a better, more-sustainable health care system that doesn’t distort the employment market is probably a little bit preferable to enabling corruption in politics.

  • ShannonEntropy

    Two reasons why HRAs aren’t a good solution to the disaster that health insurance is; and sadly those reasons also happen to be synergistic

    First, note the contradiction in your own musings. You would “eliminate most mandatory coverages for health insurance so people for whom it makes sense can buy catastrophic coverage inexpensively”

    But you had already noted that the recent Budget Bill that Gina signed “with qualms” [ according to the 7 / 6 ProJo p. A1 ]

    “… writ[es] ObamaCare into state law”

    “…no matter what happens on the federal level.” [ ProJo 7/6 again, this time p. A7 ]

    So while it’s obviously ridiculous that the ACA mandates that a 60 yr old bachelor has to subsidize a teenager’s birth control pills or abortion; or a childless spinster has to pay for some juvenile delinquent’s drug rehab treatments, those insurance mandates will remain in effect i.e. there will be no such thing as “inexpensive catastrophic coverage”

    Secondly: it is *way* cheaper to buy health insurance thru an employer’s group plan both cuz the rates are lower and the employer picks up some if not most of the cost. Deductibles & copays are cheaper with group plans too. Individually-issued policies typically cost as much as twice what a group plan does. I know this from experience when I retired 8 yrs ago and my ‘COBRA’ coverage ran out

    Thankfully both Mrs Entropy & I are now on Medicare + supplement plans… which aren’t exactly free despite what Bernie and the other leftie POTUS ‘Medicare-4-All’ candidates would have you believe. But that’s a topic for another day

    • Joe Smith

      I think one of the issues is we literally want to have our cake and eat it too. US males are something like 10th in body mass – right after the Pacific Islander nations . Pretty sure we are fatter than the countries the single pay/universal healthcare proponents like to cite as models – and of course with obesity comes a host of health care expenses (I note the cost of insulin making the news recently).

      Also, if you account – in addition to obesity related costs – for gun violence, car/motor vehicle accidents, and attempted suicides (incidents not resulting in death but health care treatment costs), I’m pretty sure you might find the US and European systems spending not as different as critics like to suggest.

      I’d add – but don’t have the data handy to support – that teen pregnancy and medical lawsuits contribute as well.

      My point is maybe the current system might work better if you could address some of the underlying differentials.

      Plus, why not experiment with allowing Medicare to negotiate drug prices directly, allowing people to sell their other body parts such as kidneys and liver sections, and thinking of ways to incentives teens not to get pregnant?