Thursday, September 24, 2009

Universal Health Insurance

The Economist's blog Democracy in America, has an illuminating post on how the US political process is turning health care reform into a sausage factory. And how the Netherlands combines mandatory private insurance and universal coverage.

In the Netherlands, the 2006 reform that privatised the entire health-insurance system accomplished most of these tasks through one simple mechanism: a tax-funded risk equalisation fund (REF). The REF subsidises the poor, pays for the subsidies, and equalises the risks to insurers, all at once. The dedicated 7% payroll tax to pay for the REF (paid by employers) covers half the total costs of insurance premiums, so about half of each person's health-insurance premium is paid out of taxes. The system subsidises the poor because they don't pay very much in taxes, while the rich do; in other words, your progressivity comes built into the tax system, rather than through a separate jury-rigged system of health-insurance subsidies funded by unrelated excise taxes, as in the American proposals. With such a large REF, it becomes possible to mandate that all insurance plans must be offered to anyone at exactly the same price, rather than limiting the premium ratio to 5:1, as in the Baucus proposal.

Something like this really seems like a better way to solve the problems of US health care coverage than any of the Frankenstein's monsters of health care bills currently shambling through the US Congress. Read the article, think about it, write your representative.

No comments: