Alan Goldhammer’s (pen name Orange14) comment on my post “Miles Kimball and Noah Smith Discuss Balancing the Budget in the Long Run” is important enough that I am reprinting it here. Appropriately, Noah and I, and the many others who joined the Twitter discussion had focused on health care as the key issue for long-run budget balance. So Alan’s comment is about health care policy:
Interesting exchange but the two of you seem to not know that this has already been proposed for the most part by Victor Fuchs and Zeke Emanuel in the New England Journal of Medicine back in 2005. Emanuel later extended the proposal to a book, “Healthcare Guaranteed: A Simple, Secure Solution for America.” It basically does what you want, establishes a global budget for all health care that is paid for by a VAT set by Congress. Everyone (including those on Medicare and Medicaid) get a voucher to buy an insurance policy to cover their health care. After market insurance would be available for those who want more than the basic package (the same as is the case with Medigap policies today).
I was involved in this debate going back to 1990 and have tracked almost every proposal that has come along. This one always made the most sense to me for a variety of reasons: 1) everyone is insured, 2) employers are off the hook and do not have to cover employees which means a better balance sheet, 3) the Medicare and Medicaid problems are solved, 4) we don’t automatically conclude that private sector delivery is bad, and 5) a global budget is established for all of health care which is responsive to the public (through Congress).
In addition, a portion of the VAT is set aside for technology assessment research to determine what works and what doesn’t so that paid for procedures/products are assessed.
Of course the only problem is getting this thing passed by Congress and signed by the President. No small hurdle there. The two of you should read the book. Unfortunately, the NEJM article is still gated.
Alan also sent me the following link by email: