Balancing the Budget–Health Reform

Central to the argument of my book Balancing the Budget is a Progressive Priority is the belief that what our country most needs to attain a long range sustainable budget is a political truce on health reform (ch. 7):

What our nation most needs is a bipartisan health reform strategy that will allow us to address the interconnected problems of the health care system: cost, coverage and quality. There is no perfect health care system and no perfect plan. However, without a deal that allows both political parties to claim some credit as well as to have some responsibility in seeking to slow health care cost inflation, we have very little chance of success.

It is well understood that health care costs are the primary long term driver of our fiscal imbalance (award for clarity of presentation), and so a viable health reform strategy is a necessary, but not a sufficient condition of ever having a balanced budget again. I lay out six next steps that I see as a bipartisan (everyone likely loves and hates something on this list) way forward to allow us to address the related issues of cost, coverage and quality.

  • Replace the individual mandate with federally-guaranteed, universal catastrophic insurance coverage and sell private “gap” insurance in state-based exchanges
  • End/modify the tax preference of employer paid health insurance
  • End the Medicaid program by transitioning responsibility for dual eligible Medicaid costs to Medicare, while moving non-elderly low income persons into subsidized private gap insurance
  • Enable Medicare to become an active health care purchaser
  • Enact comprehensive medical malpractice reform
  • Adopt an overall cap on federal health care spending backed up with a tax-based fail-safe

I will expand upon some of these ideas and answer questions on them over the next few weeks.

We need both short term efforts to boost our economy and a plan to achieve a balanced budget in the long term; a central aspect of the latter will require more on health reform. The Affordable Care Act is the only reform vehicle we have. Both sides need a health reform deal politically, at least in part to take away the uncertainty of what the Supreme Court may rule on the individual mandate during an election year. The country needs a shift away from health reform being a political football to something that all “sides” have a stake in making work. The above policies are not perfect, but we don’t need perfect. We just need to get started. We will never be done with health reform.

About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

3 Responses to Balancing the Budget–Health Reform

  1. steve says:

    I hope that you define catastrophic. Why keep Medicare separate? Why not put everyone into this same system? Would this be community rated?


    • Don Taylor says:

      @steve @MV
      I suggested $10,000 ind/$15,000 family that would be indexed. So, most people would be functionally uninsured if they didn’t buy cover in the gap. The point is to suggest something that Ds and Rs could get on board with: Ds get universal cover, and Rs get catastrophic and not first dollar. It is the search for a political deal that can help us move ahead. I suggest using Medicare as a the catastrophic cover vehicle in the book, but I would go for Feldstein’s proposal for guaranteed cata coverage done through private insurance (though it is surprsing to me that conservatives would want the new infrastructure required by his ideas; a federal health care credit card, etc.). We need a way to begin focusing on slowing cost inflation, and I think to really do it you need coverage expansion and a political deal…..though it seems hard/impossible. I am not anticipating being invited to the Rose Garden signing of the Taylor plan!

  2. MV says:

    So, you are proposing something that is worse than Medicare for all and has about as much chance of being implemented. And if it is implemented will be harmful (caps). All in the name of bipartisanship. Why exactly?

    Why is it so important to find the middle ground rather than be correct? Halfway to wrong is not partly right. And it makes really bad policy. Promote good policy, not bipartisanship.

    If good policy is not supported by both sides, then there is no bipartisanship by definition. And contrary to what you wrote, one side does not need or want political certainty or bipartisanship. After all, they oppose their own health care plan.

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