Robert Reischauer's bright idea
I was reading the transcript of the Center for American Progress/Center for Budget and Policy Priorities deficit conference over lunch today -- totally gangster, I know -- and was rewarded with an interesting idea from the Urban Institute's Robert Reischauer:
First and foremost, the issue is health-care reform, that we really need to bend the curve. Now, Alan correctly said, everybody says that, but nobody knows really how to do it. And that is true, but if you took the consensus of health experts, they would suggest that the curve is not going to be bent until we change the incentives in ways that will modify the delivery system, and that the best prospects for that involve integrated coordinated care, payments for broader bundles, like capitated payments, risk adjusted, and bonuses for performance. And one has to ask if we think that’s the right way to go, why don’t we say, if you want the full tax advantage that we give out now, or you want a subsidy through exchange, your plan has to comply with that formula.
Most economists tend to advocate removing the subsidy, and then when that proves politically impossible, they either give up or think of sneaky ways to remove or cap the subsidy. That's how we got the excise tax on insurance plans, which is a way to cap the subsidy at $21,000, but call it a tax on insurers rather than a tax on businesses or workers. But it works the same way.
Reischauer, however, is arguing for a subversion of the subsidy in service of cost control. Defining and agreeing on what counts as a "cost-controlled" plan will be incredibly different, and at the moment, we probably don't have enough data to even make such a judgment. But after a few years of health-care reform, when the pilot programs are returning their data and comparative effectiveness research is flooding into the health-care system and the exchanges are creating a more competitive insurance market, you could really see something like this taking off.
November 17, 2009; 2:25 PM ET
Categories: Health Reform
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