AEI: Improving Health and Health Care: An Agenda for Reform

Those Americans without access to employer coverage should be given a refundable, age-adjusted tax credit that is set roughly equal to the average tax break for an employer plan.

.. This rule would protect persons with preexisting conditions from being charged more, or denied coverage, based on their health status so long as they have not experienced long breaks in insurance enrollment

.. States could also boost insurance enrollment by assigning persons who are eligible for the tax credits but have failed to pick an insurance policy to a default insurance plan. The upfront deductibles for these insurance plans would be set as necessary to ensure the premiums for enrollment would be equal to the federal tax credit, thus ensuring no additional premium would be required from a person assigned to a default plan.

.. Reform of Medicaid must start with changing how the federal government pays for its share of total cost. The program should be divided into its two distinct subparts, one for able-bodied adults and their children and the other for the disabled and elderly.

.. Medicare’s rules for paying hospitals, physicians, and other service providers heavily influence how care is delivered to all patients, not just Medicare enrollees. The program would improve if there were fewer regulations and more emphasis on market-based reforms. The starting point should be conversion of the program, on a prospective basis, to a premium support model

.. HSAs should be a central component of health care in the United States. The accounts provide strong incentives for their owners to seek the best value for their health care purchases, and they provide a ready vehicle for providing additional protection against high medical expenses.

.. A comprehensive reform plan should also reform the health insurance benefit for federal employees so that it operates like a defined contribution program.

Principles for Reform

  1. Citizens, not government, should control health care.
  2. Government subsidies should come in the form of defined contribution payments.
  3. Move power and control from the federal government to individuals, families, and states.
  4. Suppliers of medical services must have more freedom to innovate and provide better services to patients and consumers.
  5. Reform must improve the federal fiscal outlook by reducing long-term health obligations.