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Ask the Expert: Eight Thoughts on the Patients' Choice Act

aaronh_portrait.jpgHenry Aaron, the Brookings Institution's famed health care expert and Washington's leading health care curmudgeon, sent along a couple of thoughts on the Patient's Choice Act. What follows comes from him and I agree with most of it. He's right, in particular, about the issue of refundable tax credits. That's a make or break question. I'm trying to get clarity on that point as we speak.

I have seen only the 'long summary,' not the draft bill (if there is one), but the summary does not use the word 'refundable' in referring to the credits. If they mean that, then, indeed, it is a major step forward. In general, I think we are on the same page:

1. Prevention is nice, but if what one is worried about is cost (and everyone should be) it is almost no help at all. The possible impact of preventive interventions on cost has been studied to death, and the evidence is clear—prevention can improve your health, but it can’t much lower spending growth. For more on that, we should talk. (I have a longer post on that question here -- Ezra.)

2. State-based exchanges are a really good idea; see my piece in The New Republic.

3. Converting the deduction into a credit is a good idea if, but only if, it is refundable. Refundable credits have been an anathema to the likes of Senator Tom Coburn (Okla.) and Rep. Paul Ryan (Wis.) in other contexts. I don’t see from their description any explicit indication of whether it is or not, but the absence of the word ‘refundable’ is not a good sign.

4. HSAs—unlike some of my liberal friends, I do not regard HSAs as dreadful health policy (they are dreadful tax policy, and I oppose them for that reason). But the key on whether they are good health policy is whether employers are required to share with employees some of the savings they will realize from converting from regular to high-deductible insurance. If they are not, fuhgeddaboutit. If they are, fine. The way to do that is to mandate that some part of the savings be put into the HSA. In addition, there is something a bit wacky in replacing the exclusion with a credit (which converts something that primarily helps high-bracket filers into something that equally helps all filers with sufficient positive taxes) and simultaneously authorizing the payment of health insurance premiums from HSAs, which benefits high-bracket filers hugely and helps non-filers or people facing zero rates not one wit!!

5. The idea of turning Medicaid patients over to the private market is wacky. Medicaid managed care can be a good idea. Medicaid recipients include lots of people who are poorly educated, mentally handicapped, and have other problems. That is not where one wants the private market to control.

6. Payment reform for Medicare makes sense; the problem is that we are not yet sure how to do it and they don’t say how. Higher premiums for high-income Medicare enrollees is a fine idea, and starting at $170,000 may even be less severe than I would be.

7. The tort liability alternative sounds sensible at first glance, but you have to look at the details, which I haven’t done.

8. Making the Agency for Healthcare Research and Quality an independent agency with an independent board that has staggered terms would be fine if the agency is given its own funding source and a free hand to carry out controversial research, including cost-benefit analysis, which I would be staggered but delighted to see Coburn endorse.

Overall, a mixed bag; some good, some bad, some unclear.

(Photo credit: Brookings.)

By Ezra Klein  |  May 21, 2009; 1:46 PM ET
Categories:  Health Reform  
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The full New Republic Article in #2 can be found here:

Posted by: elganso | May 21, 2009 2:05 PM | Report abuse

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