Healthy, Wealthy, and Wise Five Steps to a Better Health Care System

by Cogan, John F.; Hubbard, Glenn; Kessler, Daniel P.

• ISBN13: 9780844771786
• ISBN10: 0844771783
• Format: Hardcover
• Copyright: 2006-01-19
• Publisher: AEI PRESS

Summary

America's health-care system is the envy of the world, but it faces serious challenges. The costs of care are rising rapidly, the number of uninsured Americans is at an all-time high, and public dissatisfaction is steadily increasing. How can we preserve the strengths of our current system while correcting its weaknesses? Three of America's leading health-care scholars answer that question in Healthy, Wealthy, and Wise.

Poorly conceived federal tax policies, insurance regulations, and barriers to entry have distorted health-care markets and inhibited competition. John F. Cogan, R. Glenn Hubbard, and Daniel P. Kessler propose five key policies to build a better health-care system: (1) health-care tax reform, (2) insurance reform, (3) improvement of health-care information, (4) control of anticompetitive behavior, and (5) malpractice system reform.

Together, these changes would harness the power of markets to deliver better health care to Americans. These reforms would strengthen consumers' ability to be cost- and value-conscious shoppers, while promoting quality and innovation in health care, pharmaceuticals, and medical technology. And, by cutting the cost of care by $60 billion per year, these reforms would make health insurance affordable for at least 6 million—and perhaps as many as 20 million—uninsured Americans.

Author Biography

Daniel P. Kessler is a senior fellow at the Hoover Institution. R. Glenn Hubbard is the dean of the Graduate School of Business at Columbia University and a visiting scholar at the American Enterprise Institute. John F. Cogan is the Leonard and Shirley Ely Senior Fellow at the Hoover Institution.

Table of Contents

Acknowledgments	ix
Introduction	1	(7)
The Challenge: Obtaining High-Quality, Affordable Health Care	8	(17)
The Good: Innovation	8	(5)
The Bad: Excessive Costs and Wasteful Spending	13	(4)
The Ugly: Uninsurance, the Managed-Care Backlash, and Medical Errors	17	(8)
Five Policy Reforms to Make Markets Work	25	(39)
Reform Taxation of Health-Care Expenses	27	(14)
Full Deductibility of Health-Care Expenses	33	(2)
Modified Health Savings Accounts	35	(3)
Tax Credits for Low-Income Individuals	38	(3)
Reform Regulation of Markets for Health Insurance	41	(11)
Foster Nationwide, Portable Health Insurance	46	(3)
Subsidize Insurance for the Chronically Ill	49	(3)
Expand Provision of Health Information	52	(2)
Control Anticompetitive Behavior	54	(2)
Reform the Malpractice System	56	(5)
Study the Tax Preference for Nonprofits	61	(3)
Impacts of Proposals on Health-Care Spending, the Uninsured, the Federal Budget, and the Distribution of Tax Burdens	64	(17)
Effects of Reforms on Health-Care Spending	65	(6)
Tax Deductibility	66	(2)
Tax Credit	68	(1)
Insurance-Market Reform	68	(1)
Malpractice Reform	69	(1)
Summary and Discussion	69	(2)
Effects of Reforms on the Uninsured	71	(3)
Tax Deductibility	71	(1)
Tax Credit	71	(1)
Insurance-Market and Malpractice Reforms	72	(1)
Summary and Discussion	72	(2)
Effects of Reforms on the Federal Budget	74	(4)
Tax Deductibility	74	(2)
Tax Credit	76	(1)
Insurance-Market and Malpractice Reforms	76	(1)
Subsidy for the Chronically Ill	76	(2)
Distributional Impact	78	(3)
Conclusion	81	(8)
Appendix A: Estimating the Impact of Policy Reforms on Health-Care Spending	89	(6)
Appendix B: How Much Must Coinsurance Rates Rise in Order for Spending to Decline by 6 Percent?	95	(2)
Appendix C: Estimating the Impact of Policy Reforms on Uninsurance	97	(3)
Appendix D: Derivation of the Elasticity of Total Health-Care Spending with Respect to the After-Tax Price of Out-of-Pocket Spending	100	(5)
Appendix E: Estimating the Impact of Policy Reforms on the Federal Budget	105	(6)
Tax Deductibility	105	(3)
Tax Credit	108	(2)
Insurance-Market and Malpractice Reforms	110	(1)
Notes	111	(12)
About the Authors	123	(2)
Index	125