• The Worst Approach

    William Galston with a plea for discussion and education of the public on the budget deficit problem (recent CBO report) that he thinks can only be lead by the President.  Aaron has written (correctly) that the 64 Senators asking the President to lead could themselves pass anything they want; Ezra Klein writes persuasively that if the President is for anything, then the Republicans will be against it, so he cannot publicly lead.  I understand their points and think they have merit. However, I think the President needs to engage more.

    A few months ago I wrote that only the President could lead in the communication of the budget problem, using the Fiscal Commission plan as the outline.  Of course, it is politically risky to wade into these waters and both parties have experienced success in recent elections by saying ‘we are not as bad as them’ which I would argue was the primary message of the 2006 and 2010 elections.  At this point it looks to me as if that is likely to be the overriding narrative of the 2012 election. The question is whether we can afford to wait until after the next election for the next step on the deficit.

    The next election aside, the current budget debate (defund NPR!)  is either irrelevant to the actual budget problem facing the nation (health care costs) and/or harmful to the economy. Galston notes that the only way out of endless debates about irrelevant or harmful cuts to domestic spending, and certainly any hope of short term stimulus is to talk about the real long term problems:

    If you believe, as I do, that the best approach melds continued short-term fiscal ease with long-term restraint, then moving toward the long-term discussion as soon as possible is essential, for the simple reason that there’s no viable political path to the former that is not linked to the latter.

    Next steps on a serious long term plan on the deficit are needed sooner rather than later.  I say next steps, because a first step was taken in the last Congress: the Affordable Care Act (ACA). The long term budget deficit is primarily a health care cost problem and the ACA is a step toward addressing this issue (we will need more). The most obvious way to improve the cost saving potential of the law that has bipartisan support is to reform the tax preference of employer paid insurance, which is a core of most Republican health reform alternatives.  I believe such a change should appeal to progressives as well since replacing the tax on high cost insurance (delayed until 2018 by the ACA) with a modification of the tax preference is a more progressive policy option.  Making the change in 2012 or 2013 would signal seriousness on health care costs and therefore the deficit.

    The President should offer this as a modification of the ACA and if rebuffed by opponents of the ACA say simply, the ball is in your court then.  The long term budget deficit problem is a health care cost problem.  Show us your health reform plan.

    • The only way to reduce premiums is to reduce utilization, claims.
      I have a patent-pending application on a business methods product in which each month the deductible is raised, as more primary coverage becomes avilable.
      The key, though, is that even though more care becomes available (at no deductible), the participants choose to pay legitimate claims out of pocket.
      Each month, they will see how their “deductible” rises for not making claims.
      I saw figures recently that showed, on average, employees and employers spend 8% of their wages on health premiums, and only 3% on retirement benefits.
      We hope to first present this option to teachers, as they can immediately start increasing their 403(b) contributions.
      A good insurer to handle the primary coverage (up to $50,000 per family) is one who is not in the health insurance business, but is in the teacher retirement business.
      Don Levit

    • Beyond potential cost savings, I think there are big benefits in taking steps away from employer-paid health insurance. I am an American who now lives in Switzerland, where health insurance is entirely paid by individuals. Seeing this system, I have realized that my company’s objectives in negotiating the terms of health coverage are not very well aligned with my objectives.

      Here, insurance is provided by numerous private companies. They are required to offer a basic policy, in which the benefits and coverages are fixed by the government. They are also allowed to offer supplemental policies, which can be anything they can sell, up to and including coverage for stays at health spas in the Alps. The basic policy is mandatory, and no one can be turned down. The supplemental policies are optional, and are underwritten.

      Insurance companies compete on price, but they also compete on service. How clear are the statements? How fast are out-of-pocket payments reimbursed? How easy is it to get a question answered? How easy is it to negotiate claims/coverage issues? None of these service-level issues appeared to be on the table for company-selected insurance when I was in the US. But they have a big impact on one’s experience in dealing with insurers.

      The Swiss system is far from perfect. It is much too easy to change carriers during the annual enrollment period, which allows mass migrations of customers to companies that happen to have had a good year and can set premiums a bit lower. With the large number of relatively small insurers, random factors can affect claims experience significantly.