At RealClearPolicy Gary Wolfram proposes what looks to me to be a dystopian plan for health care reform:
A solution much more likely to aid the poor is for the government to move Medicaid and Medicare to a form of health savings account. It would provide complete coverage for catastrophic care, and fund an account for recipients that they could use on health care spending. This would cause people to ask “How much does that test cost here versus another clinic?†This in turn would incentivize places like Wal-Mart having to employ nurse practitioners at their pharmacy who can provide health care at reasonable prices. Additionally, it would also spur innovation in medical techniques and pharmaceuticals that make people healthier at lower costs.
Such programs would only be available to the bottom 20 percent of the income distribution, with a phase out of the benefit as income rose. And eliminating the tax deductibility of employer-based insurance or allowing a deduction for private insurance premiums would prompt a move to individual health insurance policies rather than employer-provided insurance. The result would end the fear of losing insurance due to unemployment.
Note that this plan only renders the consumer side of the health care equation “market-based”. The vast array of regulations and subsidies given to providers including patents, occupational licensing, certificates of need, etc. would remain in place.
If Medicare is eliminated, how would the present residency system be funded? Presently the Medicare system pays about $80,000 for every medical resident, an enormous subsidy to medical education. Would the subsidy be paid from the general fund or would it be eliminated?
His proposed system would only result in reduced spending if two things happen: there is presently considerable over-utilization and reduced consumption would not be made up for with increased prices, i.e. producers will accept pay cuts. Dr. Wolfram appears unaware that nearly all health care consumption is directed by producers rather than patients.
It seems more likely to me that medical billing would rise, whether through higher prices or more procedures, to make up for the elimination of Medicare and Medicaid spending. The elderly who don’t fall within the bottom 20% of the income distribution would be penurized and more and more of the middle income would become de facto working poor.
And we haven’t even touched on the issues for the insurance industry, e.g. at this point for practical purposes the individual insurance market his system relies on no longer exists.