NCPA - National Center for Policy Analysis

A Health Care Contract with America

July 6, 2012

Critics of the Affordable Care Act need an alternative vision. What follows is a short explanation of the core ideas posted at the Congressional Health Care Caucus and developed in greater detail in the book Priceless: Curing the Healthcare Crisis, say John Goodman, president and CEO, and Peter Ferrara, a senior fellow, at the National Center for Policy Analysis.

Tax Fairness.

  • Because of the way we subsidize private health insurance, the higher the family's tax bracket, the greater the subsidy.
  • Alternatively, we should replace the current system of tax and spending subsidies with a system that offers everyone a uniform, fixed-dollar tax credit for the purchase of health insurance.
  • The credit would be refundable, so that it would be available even to those with no tax liability.
  • A reasonable goal would be a credit of $2,500 per adult and $8,000 for a family of four.


  • Unclaimed tax relief should be made available to local safety net institutions to be used in case the uninsured cannot pay their own medical bills.
  • If an individual chooses to be uninsured, the unclaimed tax credit should be sent to a safety net agency in the community where the person lives.
  • These funds would provide a source of finance if the uninsured are unable to pay their medical bills.


  • Employers should be able to purchase personal and portable insurance for their employees.
  • Almost all the problems people have with pre-existing conditions arise because of a transition from the employer provided insurance to individually purchased insurance; and those problems arise because the employee doesn't own the insurance.

Patient Control.

  • Patients should be able to manage more of their own health care dollars.
  • What is needed is a single, flexible account that can wrap around any health insurance plan.
  • In this way, people could combine self-insurance with third-party insurance in creative and economically efficient ways.
  • Ideally, unspent funds could be withdrawn for other purposes without taxes or penalties.

Real Insurance.

  • Insurance should not just pay for the cost of becoming ill, it should also pay the higher premium required if patients switch health plans.
  • Insurance markets work best when each enrollee pays a premium that reflects the costs he or she is likely to incur.

Source: John C. Goodman and Peter J. Ferrara, "A Health Care Contract with America," National Center for Policy Analysis, July 6, 2012.

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