Thomas R. Saving

1. Thomas R. Saving • Director of the Private Enterprise Research Center at Texas A&M University “A College Student’s Guide to Social Security” Wednesday, 10am, Thomas 209

2. Chapter 17Medical Care Reform in the United States

3. What’s the problem with healthcare in the United States? • Quality • Access • Affordability

4. The Moral Issues • Is medical care a right? • Universal coverage vs Universal access? • Appropriate level of medical care? • Economic approach We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

5. Health Care Growth Environment Defense Goals of Reform • Social Goals • National Defense • Education • Economic Growth • Environmental Protection • Health Care • Who’s covered • What’s covered • Who pays and how much

6. Health Insurance in the United States • Employer-based group plans • Individual insurance • Government entitlements

7. Health Insurance Regulations • Federal responsibility • ERISA • Federal mandates • States’ responsibilities • Health insurance mandates

8. Economics of Mandates • Correct perceived deficiencies in health insurance market • Tendency to undervalue certain types of benefits • Adverse selection • Viewed by state policy makers as a low cost way of improving access • Tradeoffs? • Higher premiums • Lower wages • Lower fringes • Higher unemployment • More uninsured

9. Benefits Alcoholism treatment Drug abuse treatment Oral contraceptives Mammography screening Prostate cancer screening Well-child care Providers Chiropractors Dentists Nurse practitioners Psychologists Persons Adopted children Newborns Handicapped children Dependent students Processes Guaranteed issue Exclusions of preexisting conditions Premium caps Guaranteed renewable Types of Mandates

10. U.S. Policy Alternatives • State-level experiments • Federal involvement • Market alternatives

11. State-level Experiments • Hawaii • Mandated employer-based insurance for those working more than 20 hours per week • Fee for service plan through BC-BS • HMO through Kaiser • State Health Insurance Program • Coverage for citizens with income up to 300% FPL • Oregon [http://www.oregon.gov/OHPPR/HSC/current_prior.shtml] • Extended Medicaid eligibility • Coverage for citizens with income at or below 100% of FPL • Prioritized list of diagnoses/treatments • Trade-off: • comprehensive coverage for a few vs. greater access for the many? Employee’s premium limited to 1.5% of monthly salary

12. Federal Proposals • Single-payer • Elements • Basic benefits package • Private insurance is limited to extras • Physician fee schedule • Global hospital budgets • Economies of scale vs higher tax burden • Employer mandated insurance • “play or pay” • Individual mandated insurance

13. Market Alternatives • Tax credits or vouchers for low-income families • Elimination of IRS exemption • Allow interstate purchase of health insurance • Creation of health insurance purchasing cooperatives • Medical savings accounts • High-deductible, catastrophic insurance policy • MSA used to bank saved premiums and use for medical expenses (up to deductible) • Managed competition • Employers required to offer competing health plans • Employers pay 80% of Average Plan Cost (tax free)