Sunday, March 26, 2017

Repeal the Federalization of Health Insurance and Replace It with Market-Based State Plans

           Now that the federalization of health insurance, which was approved by a liberal Democratic Congress in 2009 and signed into law by United States President Barack Obama and is also known as “Obamacare,” has still not been repealed, a few thoughts on the issue of government health insurance policy are timely.

            Obamacare federalized health insurance by making it a federal requirement that people purchase health insurance and for large employers to provide coverage for their employees, as well as requiring certain benefits and coverage eligibility and prohibiting the denial of health insurance for pre-existing conditions.  The federalization of health insurance also includes a complex system of regulations. 

            However, health insurance is not generally a federal issue.  Therefore, there must be a transition away from federalized health insurance back toward private health insurance regulated by the States, not a replacement with some less-burdensome federal health insurance regulation regime.  The transition must be done in such a way that people do not lose their health insurance coverage through government actions.  It is not a federal responsibility to provide health care or health insurance or to require health insurance, but the federal government ought not to harm people by causing them to lose coverage through no fault of their own, such as has happened because of Obamacare.

            It is necessary to transition away from federalized health insurance not only because of a lack of constitutional authority for it, but because the system is flawed in every way: it has caused some people to lose the insurance plans they liked, some of whom have not been able to find replacement coverage, has increased health insurance premiums and deductibles, has increased taxes and limited freedom, has come between the doctor-patient relationship by substituting the judgment of bureaucrats for that of doctors, has caused some patients to lose the freedom of choice of medical providers and has increased to the federal budget deficit.  In addition, because employers have been reluctant to employ more than 50 full-time employees, which would meet the threshold for Obamacare, the federalization of health insurance has retarded employment growth and thus economic growth, which, in turn, has reduced tax revenues.  All of these results have come in exchange for minimal positive tradeoffs in terms of improved coverage, as millions of Americans remain uninsured, the supposed problem of which was the excuse for the heavy federal regulation of health insurance.  Obamacare is essentially a wealth redistribution mechanism and a political tool for politicians to provide more largess and control more areas of peoples’ lives.

Most Americans had liked their health insurance before Obamacare.  The many who were not covered either did not believe in health insurance for religious reasons, were wealthy enough not to need it or were young and healthy and calculated the cost of coverage was not worth the expense of the premiums, not because of some economic difficulty or some cruel neglect by government.  Some problems, such as the high cost of medical practice insurance, defensive medicine and overspending by patients, that led to higher healthcare and health insurance costs were unaddressed by Obamacare.  Obamacare also mostly fails to incentivize healthier choices by patients.

In addition to eliminating federal requirements to purchase health insurance and for employers to provide it for their employees, the federal government should decouple health insurance from employment in terms of tax policy.  Health insurance benefits should be taxed like any other income, instead of being the exception, which would inform employees of the value of their health insurance and discourage overspending for unnecessary matters and encourage healthier choices.  It would also be fair to those whose employers do not provide health insurance.  At the least, the U.S. should provide proportional tax breaks for those whose employers do not provide health insurance, as a matter of fairness. 

The federal government should eliminate Medicaid, a federal welfare program, or at least reform it to make it less unappealing to medical care providers and less expensive.  One way to accomplish these goals would be to block grant Medicaid money to the States and give them the flexibility to reform Medicaid, which would at least be less violative of the constitutional principle of federalism.

Federal and state tort reform would address the high cost of healthcare because of the high cost of medical malpractice insurance and discourage defensive medicine. 

With the return of health insurance to the States, free market principles, such as competition and freedom of choice between insurance plans and medical providers, should be followed, as well as the doctor-patient relationship restored. 

Covering patients for their pre-existing conditions is not health insurance.  This provision of Obamacare is not one of its “good” parts, despite its popularity and the phony moral case made for it.  It is a corruption of the language and an abuse of health insurance.  Such patients should not lose coverage for other medical needs, but health insurance companies should not be mandated to cover patients for an illness the patients already had.  Instead, it should be more difficult for people to lose coverage in the first place, which should be more portable generally.  Those left uninsured can be helped in other ways than by destroying health insurance.

Medical providers should provide health care for emergencies, as is legally required, and then bill the patients who do not have health insurance or who lack adequate health insurance.  Perhaps better methods of payment collection could be authorized or made less unappealing, if necessary.

Relatively less-expensive catastrophic health insurance should be encouraged, especially for those who are younger and healthier. 

As was the case more before Obamacare, healthy choices by patients should be incentivized with lower health insurance premiums.  

The federalization of health insurance can be repealed and replaced with market-based state-regulated health insurance plans that address all the problems of health insurance, especially the cost, and that increase the freedom of patients, with less burden on the taxpayers.

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