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Imagining the Impossible

An older, and recommended, Atlantic article has a sensible suggestion for radical healthcare reform. Core idea:

“First, we should replace our current web of employer- and government-based insurance with a single program of catastrophic insurance open to all Americans—indeed, all Americans should be required to buy it—with fixed premiums based solely on age. This program would be best run as a single national pool, without underwriting for specific risk factors, and would ultimately replace Medicare, Medicaid, and private insurance. All Americans would be insured against catastrophic illness, throughout their lives.”

The author has a point. Medicare and Medicaid are fundamentally unsustainable programs that grossly distort the American healthcare market and create an ever expanding government entitlement obligation that isn’t possible to control within the current system. There’s just one problem with the author’s assessment- ending Medicare is simply never going to happen. American seniors are one of the most politically active groups in the country, and any politician that proposes ending a massive government transfer to them won’t get reelected, it’s that simple. Medicare is popular because it’s great for seniors and healthcare providers- in no other country do the elderly basically get a blank government check to fund their own healthcare choices. This system will always increase demand for unnecessary procedures and lower efficiency, there’s no way around it. However, any government transfer program that provides focused benefits while diluting their cost across the population will always be very difficult to cut in a democracy- it’s beneficiaries have too strong an incentive to fight to preserve it. When these beneficiaries are one of the most powerful constituencies in the country it’s almost impossible. The author makes a good point- his plan would work much better that our current worst of all possible systems. But by proposing something that won’t happen in the foreseeable future he isn’t helping the debate. There are plenty of improvements that America desperately needs and just as many that our political system simply won’t allow. We shouldn’t focus on the impossible.

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