health care

John Delaney Won't Be President, But His Health Care Proposal Is Worth a Look

He might not be polling well, but his proposal on health care draws on work from prominent libertarian economists.

|

Former Maryland congressman John Delaney might not be polling very well in the Democratic presidential primary, but his health care policy deserves a look. 

In Wednesday's Democratic presidential debate, Delaney pushed back against Sen. Elizabeth Warren (D–Mass.) and other candidates proposing single-payer healthcare plans that would abolish private insurance

Delaney's plan also calls for universal health care, dubbed "BetterCare," but with a key difference: His plan would be a catastrophic insurance package that would cover only major, high-cost medical expenses. Everyone under the age of 65 would be enrolled, with individuals given the ability to opt-out and use a tax credit to purchase their own insurance. Those enrolled in the program would be free to purchase supplemental insurance, either individually or through their employers. His proposal calls for the new insurance system to absorb both Medicaid and Affordable Care Act subsidies.

Delaney calls health care a "fundamental right," but his proposal for providing it to everyone draws on some libertarian economic ideas. 

The late economist Martin Feldstein, chairman of the Council of Economic Advisers under Ronald Reagan, proposed a version of universal catastrophic care in The Public Interest in 1971. Feldstein argued that health insurance's main purpose should be to prevent financial hardship, and as such, should be focused on covering major, unexpected events. In other words, health insurance should work like car insurance: you don't use car insurance to pay for an oil change, and you shouldn't use health insurance to pay for routine care. 

University of Chicago economist Milton Friedman endorsed the idea of universal catastrophic insurance in 2001. He argued that universal catastrophic insurance would free up the rest of the health care system to work as a real market, with patients paying for most health care directly through health savings accounts rather than with a complicated bureaucracy of insurance companies and government programs.

Delaney's plan also helps challenge the system of employer-based health insurance. 

Many opponents of single-payer healthcare (including Delaney himself) like to point out that some Medicare for All proposals would force people off insurance plans that they like and which they obtain through their employers. But the reality is that the employer-sponsored health insurance system only exists as a result of World War II-era wage and price controls. 

Delaney's plan would allow people to continue using their employer-sponsored insurance if they would like, while eliminating the government-imposed preferences for it, by treating employer-sponsored insurance plans the same way as ordinary income in the tax code. 

There are undoubtedly potential problems with Delaney's idea. Even advocates of universal catastrophic coverage acknowledge the difficulty of the transition process. As Johns Hopkins professor Steven Teles has noted, the American health care system is something of a "kludgeocracy," an awkward regime of many ill-assorted, different parts struggling to work together to achieve the goal of providing health care. A universal catastrophic insurance program would get rid of a lot of those fragmented programs, but the complexity of the existing system means that those administrative costs of transition would be high. And from a political perspective, Americans tend to be pretty recalcitrant when it comes to changing the health care status quo—from Obamacare to repealing Obamacare.

However, when compared to leading Democratic proposals for abolishing private insurance entirely, not to mention the $32 trillion price tag on Medicare for All, Delaney's approach at least attempts to address flaws in the existing system while allowing for the possibility of market-based reforms. 

NEXT: Bernie Sanders’ #CancelStudentDebt Is a Dangerous Scam

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. That is a remarkably sane idea for any politician, let alone a Democrat. I’d vote for that in a heartbeat of the alternative is the ObamaTrumpCare we have now, or probably any of the crap we’ve had since LBJ, or even FDR’s war-time boondoggle of employer insurance tax write-off.

    I’d much prefer picking my own and getting rid of the employer tax write-off, whether or not it was replaced by a personal write-off. But supposedly this would let me pick my own catastrophic insurance too.

    Gadzooks, it will never pass.

    1. Anything that reduces government power over the individual is unlikely to pass when those voting only want to consolidate power. Too many sheep in our society that don’t understand.

  2. Universal coverage is an unattainable goal. “Health care is a right” is a hyperbolic slogan that sets up unreasonable expectations.

    He is not running in a party that will accept modest and attainable policy goals.

    1. Yes “Delaney calls health care a “fundamental right,””, based on what? Something he managed to pull out of his asshole?

      There is zero basis for his claim. Period. And this sort of TJ g should be handled through philanthropy, not government.

  3. Not only far too logical, separating catastrophic costs from routine suggests that people should then be responsible for the routine costs. And in the progressive mindset, as well as the pandering candidate strategy, making people responsible for funding their own lives is morally evil–promising free shit is much more woke (and effective with delusional voters).

    1. We all know that Womens Health care falls under Catastrophic, just ask Nancy. To deny so would be another War on Womyn

      1. Yeah, I remember when they had that slimy cunt, Sandra Fluke slither in and give her testimony. What an entitled bitch.

    2. The problem is not separating routine from catastrophic. The problem is separating CHOICE from catastrophic.

      The costs in our health care system are not driven by coverage of routine costs. They are driven by patients (and to a lesser degree doctors) having the freedom to decide on all the various expensive options before them – while others pay the bill for that.

  4. And the price tag is?????

    Instead of removing the corporate health care insurance tax deduction (political non-starter), allow individuals the same tax deduction. Hopefully a private insurance market will grow as employers walk away. Coerce, don’t force.

    1. Price tag is one hitch.

      The Government controlling End of Life decisions is another
      The Government controlling in charge of Quality of Life decisions for most is yet another

  5. Wrong!

    Like so many other politicians, Mr. Delaney is wrong. The biggest bank for the buck is basic care not so-called catastrophic care.

    Who is Mr. Delaney, anyway, to concoct a plan for medical delivery (mistakenly called “healthcare”)? What are his credentials? Jusr another lawyer-politician?

    “The world wants to be deceived, so let it be deceived.” -Petronius (1st-century A.D.)

    For a quarter-century, a plan for delivery of medical care (aka/”healthcare”) has existed that satisfies the Democrats’ demand for single payer/universal care and the Republicans’ demand for private sector/competition. Moreover, it is a plan that has been accepted by the insurance-industry. Why do the politicians and bureaucrats continue to ignore it? Loss of power?

    For a more definitive answer to that question, visit …
    https://www.nationonfire.com/healthcare-reform/ .

    1. The biggest bank for the buck is basic care not so-called catastrophic care.

      Actually, that’s not true.

      https://www.nytimes.com/2018/01/29/upshot/preventive-health-care-costs.html

      1. It is true. Original comment is correct. NYT article is wrong.

        The reason preventive care APPEARS to fail in the US – and only in the US – is because our entire medical system is built around one-year-at-a-time. Preventive has its positive results many years into the future. ‘Catastrophic’/heroic saves lives today. Employer plans and Medicare are built entirely around year-to-year mandates and open enrollments and such. There is not a single entity in the US – not even municipalities in planning for their muni-owned hospitals – that is meaningfully trying to anticipate the health of its ‘covered group’ even five years down the road. There is no ‘long-tail’ liability and no ‘long-tail’ benefit – and therefore no interest in or ability to measure medical care that is mostly about that ‘long tail’.

        It’s actually the biggest difference between the US and other countries. Not whether part of a system is ‘socialized’ or not. But whether that ‘socialized’ part of the system actually attempts to anticipate the health of the group it covers into the future. Every other socialized system does that. Our socialized system doesn’t.

        1. That actually brings up a good point.

    2. Actually he is a businessman turned politician.

  6. At this point, we Koch / Reason libertarians should support whatever health care plan will motivate more immigrants to cross our borders. If Medicare for All would accomplish this, we need to get on board.

    #ImmigrationAboveAll

    1. Members of Libertarians For Authoritarian, Cruel, Bigoted Immigration Policies And Practices might be my favorite to-be-replaced right-wing malcontents.

      1. “Members of _______ might be my favorite _______”

        Did Medicaid pay for that crutch?

        1. That’s a cheap shot, Tulpa. At least Art doesn’t change his name every few days.

      2. Well said, Art.

        By the way, I lost track of a thread from the other day in which I asked if you’ve reconsidered your position on impeachment now that we know Drumpf is literally torturing children in concentration camps.

        Here’s the MoveOn petition to impeach over #TrumpRussia and / or the Nazi concentration camps.

        #Impeach
        #Resist
        #AbolishConcentrationCamps

  7. Since his proposal is not cash for all minor medical stuff and catastrophic health insurance for major medical stuff, he is another Socialists trying to get government to cover individual life choices and healthcare best left to the Free Market.

  8. Any solution that involves expanding something like Medicaid to cover everyone–but just for catastrophic coverage–is a step in exactly the wrong direction.

    The only reasonable plan for healthcare is to cut Medicaid. Any plan that doesn’t cut Medicaid is a failure and should be opposed by libertarian capitalists–across the board.

    There was a plan that cut $772 billion from Medicaid. It passed the House, the president promised to sign it, but idiots in the Senate, some of the libertarainism, opposed it–because of what it didn’t do.

    Got a plan to plan to expand Medicaid to cover everybody? I’ve got a better idea. Medicaid is the cause of the problem (and it really shouldn’t be hard to convince libertarians that the socialist program is the problem). Anything that expands the socialist program does so at the expense of capitalist solutions. We should be cutting existing Medicaid spending–not looking for ways to get everyone on the program.

    P.S. Fuck you, cut spending.

    1. I agree entirely. However, we may not be in a position where the powers that be provide that as an option. Until that time (hopefully) comes… this seems less bad than any other option currently on the table in realpolitik terms. And I think that is all the author was trying to say.

      It is like talking yourself into eating the pack of disgusting yogurt the stewardess gave you for breakfast during a trans-ocean flight. The only real alternative you have is starving for the next 10 hours… no matter how correct your principled stance is about eggs, bacon, and waffles being the only correct breakfast.

      1. Two years ago, we were within a few votes in the Senate of cutting $772 billion from Medicaid. The only reason that solution seems unrealistic now is because we didn’t do it two years ago.

  9. how is health care a fundamental right if from someone else’s labor?

  10. Incidentally, if a libertarian economist out there thinks that our healthcare system would be better than it is now if only everybody had catastrophic coverage through something like Medicaid, they’re wrong.

    Ever hear the story about how mammograms came to be free of charge?

    Back in the 1980s, HMO’s started both charging people flat rates for care and providing the care themselves. Once they got large databases of customers, they crunched the numbers and realized that it cost a lot less to give free mammograms than it did to treat late stage breast cancer. In fact, the earlier you detect breast cancer, the less it costs to treat. So they started offering them free of charge. Medicare and Medicaid couldn’t do that–because they were so concerned about fraud. They generally only paid to treat something after the provider found evidence that there was a problem.

    Um . . . if you wait until the symptoms of breast cancer become apparent, it’s often already too late. It didn’t take long until the breast cancer survival rates came out–and it was so embarrassing for the government. The breast cancer survival rates of HMO patients were much, much higher than those of Medicaid and Medicare patients. It was so bad, the government was accused of genocide against blacks and others who were disproportionately on Medicaid. Eventually, the Medicare and Medicaid capitulated.

    Moral of the story?

    Well, there are several, but the point I’m trying to stress here is that catastrophic care is often the biggest money loser in the hospital. Anybody who thinks the problem of Medicaid distorting the markets will go away when the cost of catastrophic care becomes the government’s problem is horribly confused. You’re talking about taking the biggest problem with our healthcare system–and making it worse by piling everybody’s superlatively costly catastrophic care.

    It’s not the solution. It will just make the problem of Medicaid much, much worse. I suspect there may be some libertarian economist who thinks that end of life care would work this way through Medicare, but the idea that socializing the most expensive part of our healthcare and dumping it onto the taxpayers so that private industry can make a profit on treating the flu is ridiculous. Any economist who believes that is wrong–libertarian or otherwise.

    1. Man, incentives are a bitch.

  11. I wouldn’t be completely opposed to this, if it was: not something I sign up for, eliminated medicare/medicaid, and coverage was based on something like 25% of the average of you last five tax returns to determine when coverage starts. In other words, if you made on average $40,000 in the last 5 years, your government provided coverage wouldn’t kick in until you’ve paid $10,000 in medical bills over the year.

    Not that that, or anything even remotely similar has any chance of occurring.

  12. A plan like this is probably the best libertarian option we can realistically hope for in the near term.

    OF COURSE it would be better if all health insurance was private and there was no government involvement at all. But I think that ship has long since sailed.

    So I think a minimum guarantee from the state, that if you suffer come catastrophic health event, like a heart attack, it won’t bankrupt you – which seems to be one of the bigger anxieties out there – and leave it at that, with the rest up to the individual, then that isn’t so terrible all things considered (and especially when one of the alternatives is to make private insurance illegal).

  13. Odd, I’ve proposed almost exactly this same plan!

    In my younger days, not all that long ago, I had catastrophic health insurance for only $5 a month. (My employer payed half with another $5). That’s pretty damned cheap. But it only covered catastrophic. Which is the point. But slowly the “right” for healthcare has come to encompass nearly everything, to the point that only a tiny few years ago that feminists were demanding free contraceptives as a right (and completely oblivious that they were demanding that the taxpayer be a surrogate patriarch).

  14. How about Reason stop championing fucking politicians to “fix” health care?

    1. That is almost all of what Suderman does

  15. I’ve got your ‘health care plan” right here:

    Eliminate every single regulation of the health insurance industry. Done.

    1. And cut government spending on private healthcare.

  16. “In other words, health insurance should work like car insurance: you don’t use car insurance to pay for an oil change, and you shouldn’t use health insurance to pay for routine care.”

    Actually, there are companies out there selling health insurance like maintenance plans for cars.

  17. Insurance tinkering will not fix the health care industry. It will only make things worse. Deregulation, price transparency, competition and allowing the re-importation of drugs would be a start to a fix.

  18. John Delaney was the beneficiary of the 2011 Maryland partisan gerrymander.

  19. So my question is what happen to the price of catastrophic insurance when it becomes universal? Currently catastrophic insurance is very limited and likely mostly to young healthy people. Claims are large but infrequent. Really sick people or older people are covered by employers or the government. If you shift a large population to a high deductible catastrophic there will be more claims and the prices will rise. Anyone know it this has been modeled out to see the price effects?

Please to post comments

Comments are closed.