Thursday, April 16, 2009

A simple health care proposal

One of the strengths of the US is the fact we have 50 different states that can function as 50 different "laboratories" for trying different approaches to tackling society's problems. Since many states are very different politically, and have very different ideas of the best way to do things, it's often best to let states choose how they want to address a problem within certain parameters.

Here's a simple proposal for taking advantage of this to tackle our health care problem in this country.

We currently spend about 17% of GDP on health care. This is far more than any other nation. Let's start by bringing this down to 15%. Currently 2.9% of payroll is collected for Medicare/Medicaid. The Federal government should turn this money directly over to the states to administer a health care system. Then the feds should offer to double this money (with funds from general income tax revenues) as long as the state meets two criteria:
-Everybody has access to health care.
-Nobody has to pay more than 10% of their income for it.

This will limit health care spending to roughly 15% of all economic activity. The states will be free to try whatever solutions they like. They can try single-payer, private health insurance with limited government involvement, or anything else they want. After several years, it's likely one approach will emerge more efficient than others, and all states will adapt some variation of it. Or maybe, because of the various trade-offs in the different methods, it may be that states continue to take very different approaches because certain political trade-offs are more palatable than others to different states. Either way, we wind up with everybody able to get health care at a reasonable price and on a macroeconomic level we finally get a lid on health care costs.


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