The Jane Galt Health Plan
In the last of a good series of posts on health care, she writes,
Have the government pay for all health care expenditures above 15% of adjusted gross income, and cover 100% of health care expenditures by people living under 200% of the poverty line.
Her idea has the virtues of simplicity, market-friendliness, and progressivity. I particulary like the simplicity aspect in comparison with the typical wonkish health care proposal.
Unfortunately, it does not get at a real fundamental problem in health care, which is that the people who spend the most–the elderly–are the most insulated from having to pay for health care. As a result, there is a huge disconnect between saving and health care consumption.
Since the elderly tend to have low adjusted gross incomes (even though they many are wealthy), the Jane Galt plan would continue to provide a huge subsidy to the elderly and huge disincentives to save for the $100,000 of average spending between the age of 65 and death.
Also, I think that she, like many others, incorrectly assumes that everyone who spends a lot on health care is very sick and has no choice about the level of services they receive. As this example illustrates, that may not be the case.
In my view, the simplest health care solution would include:
–vouchers for the poor, to pay for basic health care and for health insurance with relatively low deductibles and co-pays
–a market for long-term catastrophic health insurance, that pays for large expenses cumulated over a period of years
–Remaining Lifetime Care Insurance to cover the age between 65 and death. This would be very expensive, high-deductible insurance. You might have a $75,000 deductible and pay a $25,000 premium. Once your expenses cumulate to more than $75,000, the insurance kicks in.
–Mandatory savings accounts, so that people save enough to have $100,000 when they reach 65 to cover the cost of remaining lifetime care.
For more on this, see my my new book.