KrauseKare isn't much of a Solution

I have to give Jonathan Krause credit for his post this morning. Unlike many people entering into the health care debate, Krause actually proposes real policy solutions for the problem. There's no empty rhetoric about people losing freedoms, no talk of socialism, no threats of pulling the plug on grandma, etc. Just pure policy proposals. These kinds of alternatives have been sorely lacking among those who have spoken out against reform.

Frankly, it's the single most substantive post written in opposition to the President's reform plans we've read from any blogger in Wisconsin.

That being said, there are significant flaws with each of his suggestions. For example, what Krause calls "graduated, flat-tax rates" (Step 5) looks a lot like the "progressive tax" currently in place, eliminating Medicare and Medicaid (Step 1) is next to politically impossible and even Draconian tort reform (Step 6) would do little to stem the tide of rising health care costs. That's half of Krause's health care plan right there.

Yet it was Krause's Step 3 that caused us to do a double take:

Third step--Revise the tax code to exempt all medical expenses incurred by Americans after they have spent 15-percent of the their gross income. I don't think budgeting 15-percent of what you make toward health care is that unfair. And those medical expenses will be a tax credit--meaning every dollar you spend on the doctor or prescription meds means a dollar less you will pay in taxes. That credit includes all premiums paid for private health insurance.

There's a ton to go through here, so this little paragraph right here, which essentially serves as the heart of Krause solution to the health care reform debate is packed with peril. Best to go through them one at a time.

First, I, personally, think spending 15% of my gross income on health care is outrageous. Germans contribute 8% of their incomes to health care and they have universal health care, complete coverage for every individual, no instances of bankruptcy due to health care catastrophes. Germany also does NOT have a public health insurance plan. The catch is that even Germans think 8% is a little on the high end of things. 15% would be, and is, outrageous.

Now, I know that not every one would pay 15% per annum due to varying levels of health and personal maintenance, but Krause seems to suggest that every American should store 15% of their income away in a kind of rainy day health care fund (or HSA) -- can you imagine the ripple effect if up to 15% percent of the American economy was frozen at any given time? It would drive every other industry in the country completely insane.

The said, the thing is that health care is already over 17% GDP right now. Aiming to get it around 15% wouldn't be cutting costs all that much at all. On the other hand, 15% might not be enough if costs continue to rise at the current rates.

Second, 15% means different things to different people. Two people need a kidney transplant that costs, say for the sake of convenience, $50,000. Person A makes $200,000 a year, while Person B makes $50,000 -- then Person A gets a tax credit on the first $30,000 of the transplant, while Person B only gets a credit on the first $7,500. That's unconscionable, especially considering that Person B will likely have a net income of $0 after the operation.

Third, how do people who don't receive income put away money for health care costs? I'm thinking of children and the elderly -- does a parent have to divide his 15% among his three kids (and possibly wife) if he's the bread-winner? If so, doesn't this in effect punish parents for having children? As for the elderly, these are the folks that tend to have the most expensive health care costs and yet the most minimal incomes. How does that get reconciled?

This is why the GOP has been very vocal about it's health care policy alternatives. As long as they don't offer their own solutions, they avoid having to answer question about the policy proposals that were cooked up at the Cato or Heritage Institutes. Again, Krause deserves credit for at least proposing alternatives, but the specifics he provides do very little to offer much in the line of reform.