Meanwhile, I observe the young children gulping sugar-laden soft drinks and other junk food; they are often quite obese; they sit in the room punching buttons on small electronic gadgets, which they are said to have as a major interest instead of getting any exercise, and they are having their minds poisoned by the bilge from TV, videos and movies, while government functionaries hyperventilate about toy safety.

I like it except for the delivery method. Let's distribute any federal contribution to health care via accounts set up for this purpose (similar to HSA's) for the following reasons:

1. The tax code should no longer be a vehicle by which social benefits are distributed. Then the IRS can focus on its main job, the collection of taxes. This consistency of mission should allow the agency to be far more efficient.

2. Simplification of the tax code is a goal we can all agree on.

3. We doubt that people will look favorably upon the IRS as a benefit provider. That agency is not known for its compassion.

4. Why should taxpayers have to wait several months into the next year to have access to that benefit? The benefits are expected to be spent during the year.

5. It looks to us like the tax credit approach is being used to disguise an increase in social programs as a tax cut.

Thanks for your work on health issues. You bring great clarity to the debate. For more details on our ideas, see http://www.comingtogether.info/.

Since the policies would be guaranteed renewable, in return for this they would have higher premiums early in life in return for lower premiums later in life.

So if someone left their initial policy, they could expect to have to pay higher premiums because the new company would not have had the benefit of the higher premiums when there was low risk.

A reference for this type of policy is in my proposal: plan.bipartisanhealthplan.com : Herring and Pauly (2004), NBER Working Paper W9888, Incentive-Compatible Guaranteed Renewable Health Insurance.

In my proposal I also suggest that insurance companies should be allowed to *lower* premiums for those with good health experience. This would help them combat skimming of healthy customers by other insurance companies.

I would go further, and Mr. Blanford may well agree, that neither race nor residence nor the parents’ income could be used to calculate premiums, becauses these can serve as actuariel proxies for health status. In other words, I would require every insurer to charge for all kids the same premium, although each insurer could set the level of that premium.

And it would then be fair to keep the government porgram free from backdoor subsidies. It should be fully premium financed.

I would also require that, once a family has chosen a private or the public carrier, they be required to stay with that carrier for some time — e.g., several years — to prevent the kind of implicit cherry picking that was observed in Medicare during the 1990s. Presumably the private carriers could each offer their own benefit package. If so, manipulation of that package could be used to dump kids into the public program when they become expensive — e.g., by putting judicious upper limits on drugs.

Germany uses an interesting approach. If people choose private insurance, rather than the Statutory Social Insurance system, that cannot come back to the latter, unless they were truly paupers. That strikes me as the best idea.

It is never easy to stitch together private and public competitors. We have seen this with Medicare Advantage, which could thrive only with a tip averaging 13% above the AAPCC cost per beneficiarry under government-run traditional Medicare.

No, the web site says that underwriting is required. That’s why I responded as above to your implied question.

Another weakness of this policy is that it does not cover dental, eyeglasses, and hearing tests which I believe are critical for children. Children’s policies should cover those aspects and it might be useful for government to offer either more money to parents, or to subsidize insurance companies so that they can offer such preventive checkups for free.

If the child had a policy from before birth, there would be very few children caught by underwriting and the insurance companies would have everyone in the pool.

During a transition period, until all children had had a policy since birth … perhaps 18 years, the government should reimburse insurance companies for sickly children.

This is similar to the approach I advocate at plan.bipartisanhealthplan.com

Are you sure that the United Health One policy is community-rated, that is, that every child, healthy or sick, can be insured at $43.74 a month with the same benefit package?

U. Reinhardt

I just checked ehealthinsurance.com for a 5 year-old in my zip code (22307, Alexandria, VA. There is a United Health One policy for $43.74/month. There is a $2500 deductible with zero co-insurance after the deductible. For preventive care, vaccines are free.

This policy make the maximum out of pocket/year after premiums to be $2500. A pretty good plan. There would still be $1000-$43.74×12 = $475.12 available after premiums for well-baby appointments, so most years there would be no expense.

For a baby just born the policy is $77.73/month. I would have expected that for this age there would have been a few free well-baby doctor visits for preventive care, but no. I would certainly hope that should Dr. Goodman’s plan be implemented that some insurance agency would offer such a plan. It would probably pay off, resulting in lower premiums in future years.

But there’s a hitherto well-kept secret that I will now share with you, John, and your readers.

Fact No. 1: Not all children are equally healthy. Indeed, some of them are sickly and actuarially very expensive to any insurance pool.

Fact No. 2: Ever since I have leaked this secret to the private health insurance industry some years ago, they have abandoned their erstwhile practice of charging all comers — healthy or not — the same “community-rated” premium. They now medically underwrite the premium, which means the premium for sickly children would be much higher than that for healthy children.

Now that I have leaked the secret to you, too, John, could you please tell us what you would do about this problem? Or SHOULD parents of sickly children be charged higher health insurance premiums? If so, perhaps you can explain that to me as well.

Best,

Uwe