How do we create a real insurance market? We create a national market so that you can buy insurance from any state you want. You can buy whatever you want, and we incentivize reinsurance or high-risk pools so that no insurance company would find it beneficial to game the system if you have a chronic disease. If they choose not to cover you, they will have to cover you as a participant in a reinsurance or high-risk pool. So all of a sudden they have an economic incentive to manage your chronic disease rather than duck your chronic disease.
This would restore true spreading of risk.
My position is that we don’t have real health insurance in this country. What we have is prepaid health care, for which 18 percent of our premiums go to the administrative costs of having the bills paid.
Look at the 10Ks of any of the major players in health care today. Whether you’re invested in them or not, look at the total revenues, then go look at the EBITDA, look at their overhead above that, and look at what percentage of revenues don’t go toward providing direct services in the health-care market.
Can we create a more efficient, transparent market where individuals can participate for their own benefit? We can set it up by creating a refundable tax credit, equalizing the tax benefit under the code so that, no matter what you earn, you’re treated the same. If you make more than $180,000 a year and keep your Cadillac health-care plan, you might see slightly increased taxes. If you shift to a higher-deductible plan that doesn’t offermore than about $14,000 a year in benefits, you will see no increase in taxes.
Tom Coburn presents his proposal to reform our health care system at the Manhattan Institute. Here is the core of the argument: