Lowering the Cost of American Healthcare II. Entitlements


My last post emphsizes that any solution to our nation’s long term debt problem must include reining in the cost of American healthcare.  There are two major drivers to this problem as is made clear by a new report from the American Enterprise Institute, “Improving Health and Health Care: An Agenda for Reform.”
Capture1First of all, out-of-pocket consumer spending on healthcare has been steadily declining for many years. The less we pay directly for our own healthcare, the less incentive we have to control costs.
Capture2Secondly, the cost of healthcare entitlement spending, for Medicare and Medicaid , is growing rapidly as a percentage of GDP.  Such a rapid increase is unsustainable and must be curtailed. Here is what the AEI report recommends for doing this.

  • Medicaid. It serves two groups of people: 1) able bodied adults and their children and 2) the disabled and elderly. The federal government should make fixed, per-capita payments to the states based on historical spending patterns for these two groups. The able-bodied adults and children would get the same (refundable) federal tax credits as everyone else supplemented by Medicaid payments. The states would be totally responsible for the second group.
  • Medicare. The current system would be gradually migrated to a premium support system which would provide enough to pay for a choice of competing insurance options. The eligibility age would gradually rise to 67, consistent with Social Security.
  • Health Savings Accounts. HSAs are tax-preferred vehicles for saving for medical expenses until the (perhaps high) deductible amount is reached. Their use is growing rapidly. A one-time $1000 federal tax credit for establishing an HSA would increase their number even more. Their use should be expanded into Medicaid and Medicare as well.

Such reforms as these can significantly lower the cost of providing healthcare to the poor, the elderly and everyone else as well. If we don’t do something along these lines, we will eventually end up with a government run single payer system much to our detriment.


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2 thoughts on “Lowering the Cost of American Healthcare II. Entitlements

  1. Jack doing away with Obama care is the solution. It was designed so the younger generation’s would pay for the older and the poor knowing the younger generation wont use the health care as much as the older generation would. Thus off setting the cost. However the younger generation has chosen not to buy health care and instead pay a fine attached to not having health care. That is the main reason Obama care has only taken in 280 million and owes the Insurance companies 2.5 billion that the consumer will pay at some point, Congress stopped that last year with the Cromnibus. That is also why United Health care is going to pull the plug on Obama care. This was the left using ideology and a computer model to skewer numbers and fool the american people. Which we were not fooled! Check this out, http://www.cchfreedom.org/

  2. I think we should keep the exchanges, to help the uninsured get coverage, but end the mandates for both individuals and employers. It’s the mandates, with their rigid requirements of uniformly broad coverage for all, which are making health insurance so expensive. Also, health insurance should be decoupled from employment by replacing the tax-exclusion for employer provided insurance by a uniform tax credit for all. Those with pre-existing conditions would be covered by maintaining continuous coverage with periodic windows for new signups.
    Simply repealing the ACA altogether is unlikely to gather sufficient political support to allow it to happen.

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