(09-23-2015 08:04 PM)JOwl Wrote: This is all news to me, because I didn't follow politics until the late 90's, but I tried to look some of it up.
Two points are relevant:
1) There have been a number of Heritage proposals over time, they have evolved over time, and they have been made by different people at Heritage. "Heritage proposals" made by different people at different times can vary significantly.
2) The Heritage proposal made in response to Hillarycare was in the 1993 time frame, and not everything got to the Internet in those days. All the references I have are hard copy, and they're probably in some box in my garage somewhere.
Bottom line, you're going to have a hard time finding much on the web about this.
The 1993 Heritage proposal was based loosely on German Bismarck health care. I prefer the actual Bismarck to the Heritage adaptation, and I prefer French Bismarck to German. So, let me describe Bismarck. The fundamental concept is that you have two parallel health care systems--one public and one private. An analogy might be education in the US where we have public schools and private schools, although that analogy is imperfect at best.
The difference between France and Germany is that in Germany they are mutually exclusive, you are in one or the other, whereas in France they are complementary, and most people are in both. In Germany roughly 87% are in the public system and 13% are in the private system, whereas in France 99+% are covered in the public system, and 90% supplement with private insurance. The French public plans are pretty bare-bones and cheap, like maybe a bad HMO here, while Germany has about 130 different public plans that run the gamut. The German plans are offered by the 16 Lander, or states, through "non-profit" state agencies, plus 2 or 3 labor unions also offer public insurance plans. With 19 providers and 130 plans, obviously the providers offer multiple plans. Now, here is where the exchanges come in. Any resident of any state can buy any policy from any other state. The exchanges are created by the states to provide a mechanism for residents of one state to buy insurance out of state. If I live in Bavaria and want a policy from Schleswig-Holstein, I go to the Schleswig-Holstein exchange to buy that policy. Actually, the exchange is probably where I went to find out about that policy in the first place. In the pre-Internet days, I would have to interact with the exchange in some way other than online, but now it's obviously all on the web. With everybody having a website, the exchanges are probably redundant at this point, except perhaps as a way to provide some structure. Each state runs its own exchange and obviously promotes its insurance products on its exchange. Note that I put "non-profit" is in quotes above, because these agencies operate like profit-seeking entities, they just bonus out all their profits to employees and executives to zero out the bottom line at the end of the year. Top executives of the Lander agencies make hundreds of thousands in bonuses under this system, so the competition between them is extremely intense. It was from Germany that Heritage got the idea for exchanges as a way to facilitate interstate competition among insurance companies. The goal was to foster the same kind of competition among insurers as among the Lander as the best way to drive down costs, the standard--and repeatedly successful--free market approach. The Heritage IDEA was interstate competition among insurance companies, a key element of most republican approaches today, and the exchanges were the mechanism adopted to facilitate that, because exchanges were already functioning effectively for that purpose in Germany. So the Bismarck and Heritage exchanges exist to facilitate interstate competition in health insurance, which doesn't exist in Obamacare, whereas the Obamacare exchanges exist to administer subsidies, which Bismarck and Heritage handle separately.
In the German system, employees and employers pay for public plans, with the government paying for unemployed people through social security. In France premiums for the basic plans are paid by the government out of social security and consumption taxes. Supplemental plans are on your own, and employers can subsidize them (which is a large reason why 90% of people have them).
The German mandate means that everybody has to have coverage. If you don't select one, your Land selects one for you. In France basic care is not really a mandate because the premium is paid by government. Like Germany, if you don't select a basic plan, your province selects one for you. As I understand it, the basic plans in France are provided by non-profit affiliates of for-profit insurance companies. They don't make money and bonus it out like the German Lander, but they are still very competitive because that's where the insurance companies get their mailing lists to market supplemental plans. If I get my basic coverage from Aetna, I'm probably going to buy my supplemental from Aetna. Heritage kind of combined the two. You were mandated to buy health insurance, but you got a tax credit to defray the cost. IIRC in the 1993 version everybody got a tax credit for insurance, it wasn't means-tested like Obamacare or the Kasich proposal you quoted. That made it more like France than Germany.
One big difference between German or French Bismarck and Obamacare is that there are zero uninsureds in either form of Bismarck. Wasn't that what Obamacare was supposed to be about?
If it were up to me, I would
1) Implement French Bismarck health care. This would cost about $900 billion a year, assuming admin costs could be controlled. This would make Medicaid redundant, saving about $400 billion at the federal level (plus a significant incremental amount at the state level), and would convert Medicare to a supplemental insurance program, saving about $100 billion there. Note that the French government spends less per capita on health care than the US federal and state governments do combined, so these numbers should be doable. Repeat, the government portion of French health care spending is less per capita to provide universal care than the government portion of US health care spending is to provide not universal care. That's how grossly inefficient our government health care programs are.
2) I would replace our current hodgepodge of focused and means-tested welfare programs with a single federal program, based on either Milton Friedman's negative income tax (NIT) or the Boortz-Linder prebate/prefund, which is basically the NIT in a consumption tax setting. I would transfer the current programs to the states, who could pick them up or not, or change them, as they saw fit. Since I took away their Medicaid costs in step 1, they should easily be able to absorb the cost, particularly since the NIT/prebate/prefund will give millions of current recipients sufficient income to disqualify them from these programs. The NIT/prebate/prefund cost about $800 billion a year, less savings of about $300 billion on programs transferred to the states, for a net cost of $500 billion.
3) From 1 and 2 together, we would be looking at a net increase of $800 billion. I would fund it all by adding a consumption tax and converting income taxes to a flat rate and eliminating loopholes. A 15% consumption tax and a 15% flat tax on business and investment income, plus making the total social security tax 15% and eliminating the cap on wages, would provide sufficient tax revenues--eliminating the individual income tax altogether--to balance the budget and fund the remaining health care cost and the cost of the NIT/prebate/prefund. With that we would be taxing all forms of income--wages (through the payroll tax), business profits, and investment income--at a single rate. Going forward, I would provide that all three must move together as needed to keep the budget in balance.
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