AEI just released a health-care proposal that reminds me of my great Riddler debate with Bat-Dan over the legitimacy of transfer programs. The plan would (my summary):
- Abolish barriers to direct, multi-year contracts between insurers and individuals so that every individual can buy an insurance policy that a) reflects that person’s needs and b) is priced to that person’s real risk. In my own, non-expert opinion, I think you would get almost all of this accomplished simply by abolishing barriers to interstate commerce in health insurance. Congress is clearly authorized by the Constitution to pass a law allowing people to buy their insurance from a company in any state, and once you have that you just need one state to adopt this sensible policy of allowing people to buy the insurance they want – which quite a few states would want to do in order to attract the business. I’m really amazed no major politician has had the wit to make that the centerpiece of health care reform.
- Eliminate the arbitrary and deeply wicked IRS practice of exempting employer health policies from taxation, but not individual policies. My understanding is that U.S. law does not require this distinction, but the IRS adopted the practice in the 1940s and has never reconsidered it because it serves powerful interests. This practice effectively treats people as slaves of their employers by implicitly institutionalizing employer ownership of employees’ bodies. It must stop.
- Use the revenue from taxing all income equally (instead of arbitrarily exempting employer health policies) to subsidize poor households to buy health insurance in the market created in step 1, above.
Henry Olsen and Brad Wassink outline the program on NRO today, correctly defending the presence of some subsidies for the poor in terms of “the dignity of the individual.” (They call the belief in the dignity of the individual “conservative,” which is problematic, but that’s another topic.) The proposal itself explains why the dignity of the individual justifies some subsidies, describing what they call The Samaritan’s Dilemma: our most basic human and social values compel us to rescue those in imminent danger, yet the knowledge that we will step in to rescue leads the more marginally functional people to tempt fate. They become poor stewards of themselves, counting on the rescue party they know is always waiting in the wings.
A moderate safety net program is better for everyone than having people constantly showing up in the ER demanding rescue. As I said to Bat-Dan: “While we might envision a system where we wait for people to be on the brink of death before government helps them, it’s in everyone’s interest to introduce rules and regularity (a rescue-on-demand system would be subject to all kinds of arbitrary abuse).”