A health-care plan Ryan, Obama, and Romney should all get behind
With health-care costs skyrocketing, the US faces a critical fork in the road. Medicare for all isn't viable, but neither is Paul Ryan's privatized system. Thankfully, we don't have to choose. Having both a private and a public plan isn't just political compromise. It's what's best for Americans.
Health-care spending in the United States is on an unsustainable path. Because it is growing much faster than our incomes and our economy, it threatens to dominate the budgets of households, businesses, and governments, crowding out other priorities.Skip to next paragraph
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As we contemplate the future and debate what to do, we need to recognize that we face a fork in the road. One path leads to a privatized system. The other path leads to a public system. The path we take will have enormous consequences for our society.
No wonder debates over health care have become so fierce. But here’s the good news: A sensible compromise is not only possible but may be the best outcome. In a hybrid system, everyone – whether young or old – would have access to both private insurance and a public plan.
Right now, Medicare is primarily a public system. The government pays providers for whatever care is deemed necessary. In contrast, working-age Americans are in an essentially private system. Most of them are employed and covered by a private insurance plan that is heavily subsidized by their employers. The larger debate should be about which of these two systems makes more sense. Medicare for all? Or subsidized private insurance for all?
Let’s stipulate that the amount of subsidy provided to the individual is the same in both cases. In addition, let’s assume that the subsidy is adjusted for an individual’s age, health status, and income. Finally, there has to be a cap on total spending growth as there is in most other advanced countries and in the Affordable Care Act beginning in 2015.
These assumptions are both reasonable and allow us to focus on the major differences between the two systems. Note that under these assumptions, benefits for the elderly are more related to income than under Medicare but there are also more subsidies for the non-elderly, as in the Affordable Care Act.
The pros and cons of a public system
A public system has some obvious advantages. The government has enormous leverage to use its buying power to secure low prices and adequate coverage for recipients. Its administrative costs per person are likely to be low, with marketing costs and profits out of the picture. Other advanced countries with public systems spend far less on health care than the US and get just as good health outcomes.