President Donald Trump should avoid the mistakes of his predecessor by completely overhauling the healthcare system and doing it in a bipartisan way.
The two biggest mistakes President Barack Obama made when reforming healthcare was 1) doing it with the support of only one party, and 2) building upon the previous system rather than reforming the entire system. Trump appears poised to make the same two mistakes.
Democrats want universal coverage. Republicans want a market-based system. Trump can give both sides what they want and it would be vastly superior to the current system.
The federal government spent about $1.1 trillion on healthcare in 2016. Including the tax deduction for employer contributions to health insurance premiums, that number is over $1.3 trillion. (Keep in mind, this is only federal spending and does not include the amount states are obligated to spend on Medicare and Medicaid.)
With a population close to 325 million, the federal government spends about $4,000 per person per year on healthcare.
In 2016, the average employer-provided health plan for a family cost $18,142 total, with workers paying about $5,277 of that amount.
Instead of the employer tax deduction and all the federal government programs — Medicare, Medicaid, VA hospitals, and Obamacare exchanges — the federal government could give $4,000 to every citizen (as a voucher or tax deduction) to buy their own health insurance.
Under this proposal, a family of four would get $16,000 for healthcare insurance and expenses. While this is about $2,000 less than the average health plan, note that the average family is already paying over $5,000 from their paychecks for their health insurance. (In 2004, before Obamacare, the average premium for a family plan was about $10,000.) Plus, since employers are no longer encouraged to buy health insurance for their employees, that part of their compensation can go back into their salary, and these numbers don't account for the price variation that will come from market-based reform.
This system would have many advantages over the current system:
- Everyone gets covered. No citizen will be without a minimal level of healthcare.
- The poor would be able to enter the regular health marketplace, rather than having to rely on the awful government-run Medicaid program (whose only advantage is it's better than nothing).
- All the culture war debates over whether employers should be forced to pay for services they find morally reprehensible would be moot since individuals would get to pick their own plans (with catastrophic insurance being the only required coverage, since that is the real purpose of insurance). Employers shouldn't be involved in private healthcare choices anyway.
- All the money states currently spend on the federally mandated health programs can be redirected elsewhere — poverty, education, transportation, tax cuts, or whatever else the citizens of each state decide to spend that windfall on through their elected representatives.
It isn't a perfect system. When the government buys healthcare, it increases the cost of healthcare. This proposal wouldn't change that. But it would be far superior to the current mess of a system we have now, which is a hodgepodge of different programs added upon each other without a coherent plan for the whole system. Additional reforms could still help, such as reducing the cost of medical malpractice insurance by placing limits on lawsuits. And, patients should know how much a procedure will cost beforehand, rather than, for instance, getting bills from five different doctors you were never expecting after a surgery is over.
Republicans will complain that this system maintains the notion that healthcare is an entitlement. Democrats will complain that they don't get to control what health insurance companies provide or what individuals buy (beyond catastrophic care). But for each side to get what they want (universal coverage and market reforms), they each need to give up something in return.
This idea isn't new or original. A similar idea was once touted as the "Purple Plan" (as in red and blue make purple), which was endorsed by a number of economists led by Laurence Kotlikoff, professor of economics at Boston University. Endorsers of the Purple Plan include five Nobel Laureates: George Akerlof, Edmund Phelps, Thomas Schelling, William Sharpe, and Vernon Smith.
Such a drastic overhaul of our healthcare system can't be done without presidential leadership. President Trump was elected partly under the impression that he is a bold, outside-the-box leader. But on healthcare, he has, so far, just been piddling around the edges. If he wants a bold plan that will really work and unite both parties, he should go for the Purple Plan.