The Great Debate

– Stephen M. Davidson, a Boston University School of Management professor, is author of the forthcoming book, “In Urgent Need of Reform: Saving The U.S. Healthcare System.” The views expressed are his own. —

Polls suggest the president is losing some popular support for his health care reform efforts apparently because people worry about some of the possible secondary effects. They fear that quality of care would decline, their out-of-pocket costs and taxes would increase, and they would not be able to choose their own doctor. The fact that there is little reason for these worries is beside the point.

Ordinarily, when a problem arises, we try to figure out what the cause is and fix it.  With legislation, especially something as complex as healthcare, we don’t do that. Instead, we impose constraints that are unrelated to the diagnosis. In this case, Congress is trying to fix the problems using private insurers, without raising taxes, and keeping a limited role for government. So, leaders try to fashion a bill that accomplishes at least the main goals of reform – reducing the numbers of uninsured and containing costs – are at a considerable disadvantage. Partly as a result, it is much harder to persuade the American people that the complicated plans they come up with will do the job without harming them.

The fact is that much simpler solutions are available.  For example, require that everyone contribute an income-related amount (that is, more for higher-income people) to a dedicated federal health insurance fund (HIF), which would be used to pay insurers and health plans. And then issue vouchers which entitle everyone to choose a health plan or insurance policy.

The contribution can be called a tax, which makes it a non-starter, even though it would probably mean that almost everyone would pay less than they do now. It would substitute for the premiums they now pay as well as for most of the taxes that go to health-related activities.  (If Medicaid were folded in, the savings would be even greater; Medicare is so popular with an important constituency that it would be harder to include it in a new plan.) The amounts paid could be based on a person’s income (like our progressive income tax), which means those with pre-existing conditions would not face unaffordable premiums.

– Stephen M. Davidson, a professor at Boston University’s School of Management, is author of “In Urgent Need of Reform: Saving the U.S. Healthcare System,” to be published later this year. The views expressed are his own. –

Stories about healthcare reform often contain opposing statements from liberals and conservatives. Liberals would use government; conservatives, a market in which private insurers would compete for subscribers. Liberals say a big public-sector role is needed to rein in costs and achieve universal coverage; conservatives say that approach would face opposition from most, if not all, Republicans.

Perhaps unwittingly, that kind of juxtaposition creates the impression that there are two equally viable paths to the three main goals of healthcare reform – financial access to care for all; reduction in the rate of increase of healthcare spending; and more reliable quality of care. But the notion that these are two paths to the same end is false. In fact, competition among private insurers will always produce large numbers of uninsured people –- now at 47 million and climbing — and always produce higher spending than necessary. Here’s why.