NCPA Commentaries by John C Goodman
Dr. John C. Goodman, President and founder of the NCPA and Kellye Wright Fellow, is known as the father of Health Savings Accounts and was dubbed by National Journal as "a winner of the devolution derby." He is one of the nation's leading health economists and health policy experts. Dr. Goodman regularly briefs members of Congress on these issues and is the author of nine books.
Jan 26, 2009
THE most important domestic policy crisis this country faces was not discussed by either candidate in the 2008 presidential election. On the Democratic side, that is understandable. Democrats, after all, bear disproportionate responsibility for creating the problem. But the silence on the Republican side is puzzling, especially since any solution must involve individual empowerment, personal choice, and free-market incentives--core values of the GOP.
Sep 15, 2008
What should we do about the fact that as many as 46 million Americans at any one time lack health insurance? My colleagues and I at the National Center for Policy Analysis (NCPA) have been studying this problem for 25 years. Although no political leader has endorsed all of our suggestions, various NCPA proposals have been championed by Republicans and Democrats, liberals and conservatives.
Sep 02, 2008
Health care reform seems poised to take centre stage in the upcoming presidential election in the United States. Not surprisingly, American presidential hopefuls Barack bama and John Mc-Cain have proposed radically different approaches to health care eform. Of the two, it is McCain's proposal that would completely replace the current system with a fairer, more efficient one, providing a much better chance of insuring the uninsured and controlling health costs.
Jul 30, 2008
If you listen only to presidential campaign rhetoric, you might conclude that Hillary Clinton and Barack Obama proposed bold new changes for our health-care system, while John McCain is offering only small improvements. If so, you are in for a surprise. Most health-policy analysts believe that Mr. McCain is proposing the most fundamental health-care reform.
Jul 02, 2008
Typically, Medicaid enrollees face restricted treatment options and limited access to health care. At the same time, they are sheltered from health care costs because they pay nothing out of their own pockets when they receive care.
Jul 01, 2008
As of January of this year, U.S. employers can automatically enroll their employees in 401(k) plans with diversified portfolios- without fear of lawsuits and without certain regulatory burdens. Automatic enrollment should increase participation by about one-third, and diversification should produce larger and safer returns, although employees are able to opt out of both decisions. In the future, roughly one of every two 401(k) enrollees is likely to be so enrolled.
Jul 01, 2008
In a rational world, deductibles and copayments serve an economic purpose.
In the health insurance market, however, those principles are increasingly being turned upside down as a result of government interference and providers' attempts to cope with it.
Click to read more about the irrational world of health insurance.
Oct 16, 2007
America's health care system has three fundamental problems: cost, quality and access. Why do we have these problems? What do the Democratic presidential candidates propose to do about them?
Health care spending per capita is growing at twice the rate of growth of national income. If that trend continues, health care will crowd out every other form of consumption by the time today's college students retire. The reason for this dilemma is that patients are rarely forced to choose between health care and other uses of money. No one is ever asked to decide whether one more knee replacement or one more MRI scan is worth the money it costs. No one ever has to decide whether it is worthwhile to spend one-third of Medicare's budget on patients who are in the last year of life.
Sep 18, 2007
Thirty years ago Michael Dukakis campaigned for president with the boast, "I have insured everybody in Massachusetts." Of course he hadn't, and three decades later, everybody in Massachusetts is still not insured. Along the way there have been many other plans to create "universal coverage." They haven't worked either.
Jul 27, 2007
The state children's health insurance program (SCHIP) was originally a Republican program to provide health insurance to children in near-poor families who did not qualify for Medicaid. Democrats now want to expand SCHIP to children of the middle class. Their efforts to do so are rightly being resisted by the White House, but Senate Finance Committee Republicans have already caved on an unwise compromise - agreeing to raise the eligibility to 300% of the poverty level ($62,000), up from the current 200%. House Democrats will now see if they can get the GOP to cave some more. House Democrats want to push coverage to 400% percent ($83,000 annual income).
On the surface, congressional Democrats appear to be rescuing children from the scourge of uninsurance. The reality is quite different. If they get their way, millions of children will have less access to health care than they do today, and the same will surprisingly be true for many low-income seniors. On top of all this, Democrats would also impose highly regressive taxes.
Studies by MIT economist Jonathan Gruber show that public insurance substitutes for private insurance and the crowd-out rate is high. In general, for every extra dollar spent on Medicaid, private insurance contracts by 50 cents to 75 cents. For SCHIP, depending on how it is implemented, private insurance could contract by about 60 cents.
These findings make sense. Why pay for something if the government offers it for free? Under congressional proposals to expand SCHIP, the crowd out would likely be much worse. The reason: almost all the newly eligible beneficiaries already have insurance.
Yet almost eight of every 10 children whose parents earn from 200%-300% more than the poverty level already have private health-care coverage, according to the Congressional Budget Office (CBO). At incomes between 300% and 400% more than poverty, nine of every 10 children are already insured.
What about the eight to nine million children currently uninsured? Nearly 75% of them are already eligible for Medicaid or SCHIP, according to the CBO. So the main result of the Democrats' proposal to expand SCHIP will be to shift middle-class children from private to public plans.
Why is that bad? One reason is that most SCHIP programs pay doctors at Medicaid rates-rates so low that Medicaid patients are having increasing difficulty getting access to health care. Anecdotal evidence suggests that U.S. Medicaid patients already must wait as long for specialist care and hospital surgery as in Canada.
Many doctors won't see Medicaid patients. Among those that do, many will not accept new patients. As a result, children who lose private coverage and enroll in SCHIP are likely to get less care, not more.
There is also the issue of who exactly will be covered. Republicans want to restrict SCHIP to children. The Democrats want adults covered as well. Even under the current system, children's health insurance is increasingly a ruse to cover adults. Minnesota spends 61% of SCHIP funds on adults. Wisconsin spends 75%.
Seniors will suffer from SCHIP expansion too. When millions shift from private to public coverage, not much happens to the overall rate of uninsurance. But the government's cost soars. Where's the money to come from? One idea popular with some house Democrats is to reduce federal payments to Medicare Advantage plans. These plans provide comprehensive coverage to low-income seniors who can't afford supplemental insurance to fill all the gaps in Medicare. One in five seniors has enrolled in these plans and one in four of those is a minority. In the House of Representatives, health care for this group is a great risk.
The proposal to expand SCHIP comes at a time when health-care spending already poses a serious threat to the federal budget. The Medicare trustees tell us that the program's unfunded liability is six times that of Social Security. The CBO predicts that on the current course, income tax rates paid by the middle class will reach 66% by midcentury and the top marginal rate will reach 92%.
So what do congressional Democrats plan to do about this problem? Ignore it.
A key provision of the 2003 Medicare modernization act says that when Medicare's finances deteriorate to a certain level (that level is already reached), the president must propose an appropriate reform and congress must fast-track the proposal. Yet one senior Democratic legislator-as yet unidentified-wants the SCHIP bill to repeal that provision.
In a way, repeal makes a certain sense. If the ship is going down anyway, why spoil the fun?