defined contributions


Constructing an Alternative to Obamacare

In this month’s American Enterprise Institute Health Care Policy Outlook I have a paper describing a plan for fixing America’s health care system that uses market principles, consumer choice, and fiscal discipline, rather than the government-centered approach of Obamacare.

But while more Americans are against Obamacare than for it, polls also show that a strong majority of the electorate want the very real problems in the health system fixed—just without the massive expansion of governmental power and spending that characterize Obamacare. This strong impulse for a positive reform agenda could undermine a repeal effort if there is no realistic program being readied to replace Obamacare.

Fortunately for Obamacare’s opponents, much of the work needed to construct a viable alternative was already done  many years ago by a band of economists and health policy experts who have long argued that a market-based approach to reform would deliver far better results than one managed by the federal government, as Obamacare would be.

You can read the rest of the paper online at the AEI website, here.

posted by James C. Capretta | 10:47 am
Tags: defined contributions, health care reform
File As: Health Care

Reforming Health Care with “Defined Contributions”

Over at Kaiser Health News, AEI’s Tom Miller and I have an article describing how Congress enact a health-reform program that deals with the central issue of cost control while also achieving universal coverage without the need for a mandate:

Pro-competition, pro-consumer-choice advocates should press for reforms that would begin to convert existing, federally subsidized arrangements from open-ended benefit guarantees into "defined contribution" programs. The comprehensive and strategic approach we propose would apply defined contribution financing by taxpayers to all three major insurance coverage platforms — Medicare, Medicaid and private health insurance....

The prescription drug benefit, added to Medicare in 2003, provides one partial model for how to move toward a defined contribution approach. The government's payment for a beneficiary's Medicare drug coverage is fixed through competitive bidding each year, and it remains the same regardless of which plan the beneficiary selects. Seniors selecting more expensive plans than the average bid must pay the additional premium out of their own pockets. Those selecting less expensive plans get to keep the savings. Scores of insurers entered the program and competed aggressively with each other. The result is that costs were driven down, and federal spending came in 40 percent below initial expectations....

Read the full article here.

posted by James C. Capretta | 10:30 am
Tags: defined contributions, Medicare, individual mandate
File As: Health Care

Defined Contribution Health Care

Yesterday, I had the privilege of participating in the inaugural event for the American Enterprise Institute’s new “Beyond ‘Repeal and Replace’” initiative, the purpose of which is to explore policies that could take the place of the recently passed health care law. During the panel discussion, moderated by AEI’s Tom Miller, I provided an overview of the paper I coauthored with Tom called “The Defined Contribution Route to Health Care Choice and Competition.” The defined contribution approach to reform would convert today’s open-ended federal subsidies into fixed levels of support, and thus convert millions of passive insurance enrollees into cost-conscious consumers. A short summary of our paper can be accessed here, and the full paper is available here.

The panel also included Scott Harrington of the University of Pennsylvania, who presented an overview of his paper on “Regime Change for Health Insurance Regulation: Rethinking Rate Review, Medical Loss Ratios, and Informed Competition,” and Steve Parente of the University of Minnesota, who discussed his paper entitled “Harnessing Health Information in Real Time: Back to The Future for a More Practical and Effective Infrastructure.”

Video of the entire AEI event is available below:

posted by James C. Capretta | 10:26 am
Tags: defined contributions, AEI, Thomas P. Miller, Scott Harrington, Steve Parente, repeal and replace, Obamacare