On health care, let’s ask Germany

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Before Obamacare, health care in our country was a disgrace, with close to 50 million uninsured. That’s enough people to fill up every major city in the country. Fifty million poor souls worrying every day about that big accident or expensive disease that would leave them paupers of the state. Then came Obamacare, another disgrace, but a smaller one. It left some 30 million Americans uninsured. You or someone you know is surely one of them.

Now many of our leaders want to make things worse. They yearn to repeal Obamacare and roll back Medicaid leaving 60 million — almost 1 in 5 Americans — uninsured. Why? Because a large number of senators pledged to do so, and worry that their supporters, many of whom stand to lose coverage, won’t be happy unless they are made to suffer. Yes, this makes no sense. But it’s a strange world in Washington, D.C., these days.

Those on the other end of the political divide want everyone insured, but they are sure that socialized medicine, in which Big Brother controls all aspects of the health-care system, is the way to go. This sends chills down the spines of those who live in fear of the fourth estate — government bureaucracy.

There is a proven middle way. Germany and other countries have found it. If you, like me, favor the German system, it’s time to use your outside voice to tell your members of Congress. If you flood their offices with phone calls, letters and emails, they will pay attention. Trust me. This could be the most important personal financial move of your lifetime.

Germany pays for an identical basic health-care policy for everyone and uses its progressive tax system to cover the costs. This is not just universal coverage. It’s universal coverages. In Germany, you aren’t forced to choose between plan A, which covers your liver, but not your kidney, and plan B, which does the opposite. Every plan has to cover everything.

Each year people select the health insurer of their choice, and the government redistributes premiums among these insurers based on the health status of each company’s clientele. In short, those with pre-existing conditions are treated like everyone else, and their insurance companies are compensated for their additional cost.

Some of our senators, notably Sen. Rand Paul, don’t like the words “subsidy” or “tax credit.” Under the German system, those offending words don’t appear. Poor Germans pay low taxes and rich Germans pay high taxes and the state pays the health-insurance companies.

The German health-insurance system is private. Providers compete with one another. But if they overspend on their insured, they don’t get an extra euro from the state in the form of higher premiums. Hence, they have the right incentives to provide only needed care. But they also want return customers. So they also have the right incentives to provide quality care. The system has copays and deductibles, but they are small enough for even very low-income households to handle.

Finally, any German can join any health-care plan no matter where they live. German insurers can’t pull out of certain markets where patients are in worse shape. They have to operate nationwide. But they do so knowing that, if their patients are sicker than average, the government will redistribute to them from companies with healthier-than-average patients

The German system is essentially Medicare Part C for All. Kotlikoff.net posts prior columns I’ve written about health-care reform. And purpleplans.org lists a large number of economists, including Nobel Laureates, who have endorsed the German way.

Everyone should love this solution. The plan eliminates Medicaid, Obamacare, employer-based health care and traditional Medicare (although current and near-term Medicare participants would be grandfathered).

For those who hate Obamacare or worry about exiting insurers, Medicare Part C for All is ideal. Every health plan in the country would be forced to accept any and all participants.

As for employers, they’d no longer need to provide health insurance, which would get a huge monkey off their backs and permit more hiring, especially of low-wage workers for whom the fixed cost of providing health insurance looms large. As for the rich, they would be free to buy supplemental policies from their basic insurer to ensure them their private hospital rooms and gourmet meals.

Health-care reform isn’t over. Obamacare is falling and being pushed off the cliff. Medicaid and Medicare are going broke. And employer-based health care is costing companies a rising fortune. It’s time to wipe the slate clean and fix the entire system for once, for good and for all.