My Rx on Health Care Reform: Baby Steps

Obviously, the health care reform legislation by the Democrats is in serious trouble. Instead of us doing a "baby out with the bath water" type of destruction of America's health care system, I would suggest that legislation be done in baby steps.

Without even addressing tort reform -- an apparent special interest taboo for the Democrats -- I think Congress could go a long way by making a basic catastrophic insurance policy available to all Americans regardless of any pre-existing medical conditions.

To accomplish this, I would suggest that Congress allow all 1300 health insurance companies to compete nationally rather than be confined to selling insurance on a state-only basis. But, in order to complete nationally, the insurance companies must provide a basic national health insurance policy that is available to all; regardless of any age or health condition.

I think the basic policy could be a basic $5,000 annual deductible-per-person insurance policy ($10,000 max per family) that would cover 100% of expenses once the deductible is met. It would not cover elective or any experimental forms of medical treatment.

In order to share the risk equally, the insurance companies could be allowed to establish a collective "risk pool" for people with high risk or pre-existing conditions and such insurance pools would not be subject to anti-trust laws that would normally be used to bar such activity. To spur competition, no single risk pool could insure more than 10% of the nation's population.

The pricing for the basic insurance rate must be published quarterly so Americans can shop for the best deal. But, any insured person will be restricted from switching from a particular "risk pool" or insurance company until you have completed a minimum of 18 months of coverage with any particular insurer. This should avoid a massive dumping of insurance companies on a quarterly basis.

For low or no income Americans, the Federal Government could pick up the cost of this basic insurance. Above that, a progressive Earned Income Tax Cedit could be applied to income tax filers who file tax returns and who live above the poverty income level. The amount of the tax credit should be a progressive tax with it being completely unavailable to those making, say $100,000 or more. People at the lowest ends of the pay scale would receive a 100% reimbursement.

Beyond the basic national catastrophic insurance policy, the insurer could offer all forms of supplemental insurance that would dovetail with the catastrophic insurance policy; similar to AARP's supplemental insurance for Medicare recipients. Employers would also be able to pick up the cost of both catastrophic and supplemental insurance as a hiring incentive.

Like it or not, the above is really a form of public option "but" -- and a very important but -- without the government. That's important because it insures that there is still competition between the insurers. It provides the portability that is lacking in our current system. And, it should make insurance available to everyone. By allowing national competition for insurance, costs should come down with competition.

Beyond the above, I think that our lawmakers should work on tort reform. I would like to see lump-sum litigation awards be eliminated and some form of annuity-based system instituted. This could reduce the amount of burden on the malpractice insurers by at least 1/3. In general, that would lower the cost of providing health care to the tune of probably $100 billion. Also, the highly subjective "Pain and suffering" awards should be capped at some reasonable number. These awards have been spiraling as juries seem more and more inclined to punish doctors with massive judgments.

Certainly, this is just one idea of many that could stop our doctors from practicing "defensive" medicine to avoid being sued.