Medicare: Emanuel Healthcare VAT Bridges Ryan & Obama

On the editorial page, today’s NYTimes restates their opposition to potential future cost increases to Medicare recipients in Paul Ryan’s plan (“The Republican Medicare Reshuffle,” 04/15/11).  Paul Krugman, too, decries the notion that unlimited benefits may not be paid for indefinitely without substantial additional contributions by recipients (“Who’s Serious Now?“).  David Brooks in “Ultimate Spoiler Alert” endorses Ryan’s concept of using defined contributions, a de facto voucher system, for Medicare.

Dr. Ezekiel Emanuel, Director Bio-ethics at NIH has long proposed a plan which would bridge the divide.  He has called for healthcare vouchers to be used in an exchange and paid for by a dedicated value added tax.  This exchange should include Medicare as an option alongside private insurance, which would force the insurance companies to compete with the benchmark standard.  Paying for healthcare with the VAT would ensure that healthcare consumers were aware of the costs and would force them to consider what demanding more benefits would mean to their pocketbooks.

The Ryan plan covers everyone over 55, today with the same benefits that retirees now enjoy.  If, as OMB indicates it would cost another $7,000 per recipient in 2022, then the public could consider shouldering the increased burden via an increase in the VAT, which would be somewhat progressive since wealthier Americans consume disproportionately more than the  less advantaged.  And, those in the lowest brackets could be protected with Earned Income Tax Credits.

Corporations and labor should like this concept.  It would remove the direct corporate burden of healthcare costs.  VAT, subtracted from exports under GATT rules would make exports more competitive.  The VAT would assure that imports carried an equal burden as domestic production and make U.S. labor and business more competitive at home.

Isn’t that a plan that both the President and Paul Ryan could support?