Ezra Klein discusses a new health care proposal by Congressman Ron Wyden, and I'll give a summary. It's one of the more interesting ones that I've heard. The fundamental problem with our system is that insurance companies don't want to cover people that actually use health insurance, and people that don't use it don't want to pay to subsidize their neighbors. The incentives don't have anything to do with good health care.
Changing this to a national system in one fell swoop isn't going to happen because the private companies involved are really big, employ lots of people, and give lots of money to Congress.
Wyden's plan has three major parts. First off, insurance companies would only be allowed to price discriminate based on geography, family size, and smoking status. This is called "community rating" and fixes the problem of insurance companies hiking prices on unprofitable customers. Second, everybody is legally required to purchase insurance. This fixes the problem of young healthy people opting out of the system. Third, there are subsidies to families up to 400% of the poverty line, which is about about 40K for a single person and about 60K for a family of three.
A huge implementation detail is that it requires that employers offering health insurance instead give their employees the same amount of money in wages. This is more a political feature, with two effects. First off, it makes folks getting benefits happy that they're getting a raise. Second, it offers employers stability. Wages increase at a slower rate than health-care premiums, so they can effectively freeze that part of their compensation at current levels.
My first huge concern is that this is a giant transfer from young (relatively low-wealth) people to older (relatively high-wealth) folks. That could well be taken care of in the subsidies, which I haven't read about in detail.
The major remaining misaligned incentive is that insurance companies don't have much reason to cover long-term preventative care because by the time it matters, customers are with another plan. I don't see anything to address this concern, and don't expect to. The VA's lifelong coverage is the only model in the US that's really fixed it.
Overall, though, I really like the Wyden plan. Mandating community rating and individual coverage fixes the major incentive problems in one fell swoop. It also takes advantage of a lot of existing infrastructure, and includes politically attractive features (such as offering employers cost stability).
