Matthew Yglesias on Health Care Reform

by Avik Roy

Yesterday, in the interests of reaching a compromise solution to the budget deficit, I proposed a $300 billion tax increase—by eliminating the federal subsidy for employer-purchased health insurance—and asked for suggestions from the other side for corresponding spending cuts. In response, Matthew Yglesias pointed out to me that there are no $300 billion-a-year programs that one can simply eliminate in the same way that one can raise taxes.

That is true, and it is one of the main reasons that we should have an extremely high bar for launching new government programs (like PPACA) that are very difficult to unwind, should they later prove inefficient or ineffective. Nonetheless, we will need to come up with ways to reduce spending, and I continue to welcome suggestions in that regard.

Yesterday, Yglesias published a constructive post on health care reform. The most interesting paragraph is the final one:

Meanwhile, I think the real issues are obscured by continuing conservative obsession with repealing the Affordable Care Act. In a big-picture sense, what ACA is doing is transitioning American health care for the 64-and-under set into a means-tested voucher program. Meanwhile, the big conservative proposal is to transition American health care for the 65-and-over set into a means-tested voucher program. That doesn’t necessarily strike me as an unbridgeable chasm of principle. What if all Americans, regardless of age, got their health care through a means-tested voucher program that included a public option?

It would be great if all Americans, regardless of age, got their health care through a means-tested voucher program (though I will part ways with Yglesias on the beneficence of the public option). As I have pointed out in the past, this is what the Swiss do, and it works remarkably well. The Swiss do not offer any government-run insurance options, but they do require that participating private insurers are non-profit entities. The key feature of the Swiss system is that everyone purchases insurance for himself, rather than having it purchased on his behalf by employers or government agencies. The elimination of the employer tax exclusion is an important part of bringing such a system to the United States.

If liberals and conservatives are able to come together around such a framework, we could make great strides both for the health care system and our precarious fiscal situation.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.