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A True Bipartisan Health Care Compromise

A True Bipartisan Health Care Compromise

By Robert Robb - February 12, 2010

President Barack Obama's invitation to congressional Republicans to attend a bipartisan televised summit to explore everyone's best ideas about health care reform is transparently insincere.

Obama doesn't need a televised summit to learn Republican ideas about health care reform. He knows what they are. He doesn't like them.

Nor do true negotiating sessions occur before television cameras. They occur in private discussions, such as those Obama held with Olympia Snowe - a Republican he was sincere about negotiating with.

Before cameras, politicians preen and posture. And he who controls the microphone, controls the spin - as Obama learned when he got the upper hand in his appearance before the House Republican caucus.

Instead, the purpose of the televised summit is political: to shift public opinion sufficiently that either Democrats muscle up to pass Obama's own health care plan or more of the blame for failure falls on the Republicans.

All of which is too bad, because there is a true bipartisan compromise on health care that would really serve the country. It would involve Democrats accepting a transition to a robust individual health insurance market for most Americans and Republicans accepting government as the insurer of last resort for those acutely or chronically ill.

There are two fundamental insecurities people feel about health care that merit political attention: (1) people are dependent on employment for coverage; and (2) there is too large of a risk of going broke if people get seriously sick.

There is utterly no rational basis for people to be dependent on their employer for health care. It's an artifact of World War II wage-and-price controls. In a rational world, people would no more worry about losing their health insurance if they changed jobs than they worry about losing their car, home or life insurance.

The employer-based system, however, is entrenched by tax laws that make health insurance deductible to the employer but not taxable as income for the employee. Providing at least as generous tax treatment to individual health insurance is the first step toward a more rational and secure system.

If there was a robust individual insurance market, products would change. It is very likely that term health insurance, much like term life insurance, would develop - enabling people to insure themselves against illness at a fixed premium over a long period of time.

If, however, there is to be universal coverage, the health care of the acutely and chronically ill will have to be subsidized. How it is subsidized determines who the burden for the subsidy falls on.

The current Democratic bills provide the subsidy through the insurance premium mechanism, by requiring insurance companies to accept people irrespective of pre-existing conditions, forbidding medical underwriting and sharply limiting the ability of insurance companies to price according to risk. This puts the burden for the subsidy disproportionately on the young and healthy, who will pay much more for health insurance than otherwise would be the case.

A much fairer way would be to provide the subsidy through the tax mechanism, by allowing anyone whose medical expenses exceed a certain percentage of income to be eligible for Medicaid. Then the burden for the subsidy would fall on those in their prime income-producing years.

Government as the insurer of last resort would also relieve the insecurity about going broke because of serious illness. Republicans want to do that through such things as assigned risk pools. But that doesn't provide the same level of assurance as a government insurance program and again funds the subsidy through the premium mechanism.

This is also the combination - making health insurance personal rather than employer-based, with government providing a safety net - that would do the most to control costs.

So, there is a bipartisan compromise possible that would relieve the insecurities of the American people about health care and put in place better incentives to control costs. Just don't expect to hear anything about it amidst the preening and posturing at the televised summit.

Robert Robb is a columnist for the Arizona Republic and a RealClearPolitics contributor. Reach him at robert.robb@arizonarepublic.com

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