Arnold Kling  

Health Care: Mandates or Vouchers

The Other Demographic Suicide... Who Says Austrians Don't Do Go...

Grace-Marie Turner and Joseph R. Antos write about a Republican health care proposal,

The nexus of their plan is redirecting the $300 billion annual tax subsidy for employment-based health insurance to individuals in the form of refundable, advanceable tax credits. Families would get $5,700 a year and individuals $2,300 to buy insurance and invest in Health Savings Accounts.

Low-income Americans would get a supplemental debit card of up to $5,000 to help them purchase insurance and pay out-of-pocket costs. They would have an incentive to spend wisely since up to one-fourth of any unspent money in the accounts could be rolled over to the next year. The combination of the refundable tax credit and debit card gives lower-income Americans a way out of the Medicaid ghetto so they can have the dignity of private insurance.

The basic idea is a health care voucher (like food stamps) as opposed to a health insurance mandate. This is a logical approach, one which every health care policy wonk can appreciate and support. However, it does not give government the kind of hands-on, top-down control over the health care system that the Democrats want, and hence it is a political non-starter.

Comments and Sharing

COMMENTS (7 to date)
John Thacker writes:

It's not all that different from McCain's plan as a candidate, which was massively attacked.

The problem is the "redirecting the $300 billion annual tax subsidy for employment-based health insurance to individuals." Overall, people think that the system is broken but like their own current plan.

On health insurance, Obama ran against change for anyone happy with their current insurance. Of course, that makes it nearly impossible for him to pay for his plan.

John writes:

I certainly prefer this approach over the mandate method.

However, this approach does not work toward dismantling the distortion caused by Government intervention. The tax subsidy allows insurance companies to get away with higher prices than they would if the subsidy did not... at least that's my opinion.

tjames writes:

How do voucher plans address the "guaranteed issue" problem? Right now, employer health plans are guaranteed issue, which means if you get a job that comes with healthcare benefits, your actual state of health does not keep you from getting the insurance.

Individuals and families are very small risk pools, and insurers find all sorts of reasons to decline insurance to them, e.g. pre-existing conditions, state of health, etc. Not all such conditions are the fault of the individual - think cancer survivors.

So, how is addressed?

Gary writes:


Caring for those who cannot be profitably insured is a charity issue. It's actually pretty easy to discuss the available options once you recognize that.

Dan Weber writes:

tjames, that could work if insurance companies were required to either accept every person that comes to them with a voucher or else accept no vouchers.

AB writes:

This makes sense to me, but I've read up on the subject. I think the main reason it won't go anywhere is because most people know nothing about health care policy. As a younger voter I've discussed health care with many of my peers and they all think what we have now is an unfettered free market in health care, which of course is false. They also seem to believe that "universal" health care would cure all of the health problems America has and usher in a new era of rainbows and unicorns. If anyone tried to explain this system to them (I've tried) they say "Isn't that what we have now" or call you a heartless conservative.

The moral of the story; the public needs to be better educated on the subject of health care, and then maybe more politicians will pay attention. Also, there's no such thing as unicorns.

hacs writes:

Perhaps, it would be better the health care industry to be broken in two (or more in a more refined view) antagonistic sectors: a sector of diagnostic and preventive medicine rewarded by the number of right diagnostics and impact on local health indexes, being punished in terms of compensation by the excessive demand (inefficient path to diagnostic) of the second sector; and a sector of laboratories and specialities. Both would act as if they were disputing the same booty.

Comments for this entry have been closed
Return to top