This is from Brad DeLong, UC-Berkeley Economist and former Clinton Treasury Official:
"20% Deductible/Out of Pocket Cap: The IRS snarfs 20% of your family economic income. 5% of it is an increase in taxes (but that replaces your and your employer's current health insurance premiums). 15% of it goes straight into your Health Savings Account. That HSA is then used to pay all your family health bills. If your expenses in a year are less than what's in your HSA, the balance is rolled into your IRA (or, if you prefer, returned to you with your tax refund check).
Single-Payer for the Rest: If your HSA is emptied and you still have more health bills that year, the federal government pays them. The main point, after all, is insurance: if you fall seriously sick, you want right then and there to be treated whether or not your wallet biopsy is positive.
Sin Taxes: on Tobacco, Gorgonzola, Three-Liter Bottles of Liquid High-Fructose Corn Syrup, Tanning Clinics (Melanoma), et cetera: Sin taxes (and, perhaps, someday general revenues) pay for an army of barefoot doctors and nurses and mobile treatment vans roaming the country, knocking on doors, and providing preventive and other long-run lifestyle services for free: Let me examine your prostate. Mind if I check your refrigerator and tell you how to eat healthier? Have you exercised today? I'm a Pilates instructor, and we could do a session now? Are you up on your immunizations? Anybody here have a fever and need antibiotics? Come on out to the van and I'll clean your teeth." The idea is to make the preventive care cheaper-than-free, to insure that nothing with a high long-run benefit/cost ratio gets left undone because people would rather get a bigger check the next April to use to buy an HDTV.
A Lot of Serious Research on Best Public-Health, Chronic-Disease, and Hospital Practices: Made easier, of course, by linking the payment records from the health branch of the IRS to hospital records to the wirelessly-transfered logs from the barefoot doctor vans.
That's it. No deduction for employer-paid health expenses. No insurance companies.
The key is that we face not a health-care financing crisis but a health-care treatment opportunity. Technologies are going to do marvelous things: we are going to have livers grown from our own tissue on reserve in hospital basements in case we go picnicking and eat the wrong mushrooms. We need to figure out (1) how to spread the benefits of current and future medical treatment options as widely as possible while (2) also making sure that a lot of thought and energy goes into figuring out what effective treatments have the highest benefit/cost ratios--i.e., cost least--because those are the ones we can collectively afford to do the most of, and while (3) making sure that we collectively earmark as much of our total resources to health as we really want. Government programs are good at (1). Markets are good at (2). And insurance is good at (3) if we can deliver the right incentives to insurers. These three goals are in considerable tension. The package above strikes this relatively ignorant economist as likely to give us the best chance of getting as close as possible to utopia.
Why the 20%? Because I am very impressed by the use of technology to drive the cost reductions--which means the reductions in doctor and nurse time: the increases in the number of procedures that a given treatment unit can perform, and thus in the number of people whom we can, collectively, treat--in beneficial-but-optional areas like eye surgery and lenses. It does seem to matter that consumers are cost conscious and economize when they have financial skin in the game. This is the mother of all Health Savings Account proposals.
Why the barefoot nurses? Because there are an awful lot of games where we don't want economization. This is the mother of all public-health and subsidize-preventive-medicine proposals.
Why single-payer above 20%? Because I think there's no space left for insurance companies. Insurance executives' and actuaries' incentives are horribly wrong--they are either to figure out how to exclude the sick from their coverage or to skimp on preventive stuff because twenty years hence the patient will be covered by some other company. You want doctors to have incentives to deliver necessary and appropriate care better. You don't want insurers to have incentives to deliver shoddier and cheaper care in hard-to-monitor ways."