TW: I frequently point out the lack of solutions from the Republicans on issues such as health care. They are good at complaining but not so much at solving. So here is an attempt from a Republican at health care reform. A taste (kinda) great, less (very much so) filling effort to say the least.
Sen. Demint of SC suggest giving vouchers to Americans for use in buying health care. At a superficial level it sounds like a "free market" type action instead of perfidious government led reform. The concept breaks down rapidly. Furthermore it is highly cynical as Demint claims it would not raise the deficit, but he "achieves" that goal by gutting the primary government measure to avoid GD 2.0 (TARP). So as the piece points out, it does not raise the deficit because TARP has already been funded (not to mention if one guts the primary measure against GD 2.0, perhaps the odds of GD 2.0 go up).
The fundamental challenge with vouchers is that it basically channels more money into health care with no measures to contain costs. Classic economics tells one that if you push more money into a good (think of oil prices) without increasing supply or limiting costs increases, all one gets is inflation. Demint's plan does not nothing to address folks with pre-existing conditions or merely sub-optimal demographics (i.e. being say 50 instead of 20 years old).
This is a nice example of a simple-minded "free market" approach to a market that is neither "free" nor normal.
From Slate:
"...The plan, basically, is for the federal government to give out annual vouchers to Americans which they can spend on any health care insurance offering they want: $2000 dollars for individuals, and up to $5000 for families.
Under the Health Care Freedom Plan, Americans would be able to keep the care they have now, but if they are uninsured or unhappy with their current plan, they could access a voucher to purchase health insurance anywhere in the country.
...And at no cost to the taxpayer!...
How, you might wonder, could the U.S. government offer a $5000 health care voucher to every uninsured American family without adding a dime to the deficit? The answer is brilliant: Pay for the program with TARP money! Yes, "The Health Care Freedom Plan" is paid for by requiring banks to pay back all their TARP money within five years, and then use that money for the vouchers.
Frankly, I am in awe. Nothing will be added to the deficit because we will be re-using money that was added to the deficit last September.
So what happens when TARP runs out? How would succeeding allocations of vouchers be funded? There's not a whisper of an answer to that question in the DeMint press release or summary.
Two other questions.
First: If the government is offering vouchers to anyone unhappy with their current coverage, why should businesses bother offering health care coverage to their employees at all? There's a built-in incentive here for employers to abandon their own
health care offerings, which would surely send the cost of the government program skyrocketing in short order. (Yes, this would be a potential problem with any government-subsidized health care reform, but the incentive seems particularly stark in this case.)
Second: How exactly would this plan work to bring down health care costs? At first glance it would seem to do exactly the opposite. A massive transfer of taxpayer dollars almost directly to the HMOs would seem inherently inflationary. What incentive does anyone have to cut costs when the government directly subsidizes the HMOs?"
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