Murray Tucker, Ph.D.: Buying reinsurance


Forty years ago, the President's Commission on Income Maintenance Programs issued its final report. Its recommendation for a Guaranteed Annual Income or "Negative Income Tax" morphed six years later into the "Earned Income Credit." But the Commission denied recommending approval for a second program, one to combat the increasing problem of catastrophic health care costs. Although not accepted by the panel, the concept found its way into the White House. President Richard Nixon had an early start in considering federal government involvement in financing health care. In 1947, he teamed up with Sen. Jacob Javits to provide a Republican alternative to President Truman's single-payer plan. Neither went anywhere.

In what would be his last State of the Union message (February 1974), Nixon presented his Comprehensive Health Insurance Plan. Other than its emphasis on Health Maintenance Organizations, it, too, went nowhere.

The continuous conflict between the advocates of "single-payer" (Truman, Kennedy and Clinton) and the less efficient but more politically palatable extension of the current system (Nixon) has left the American public with neither.

If we are to have what seems to be the politically expedient program, one key element of the Nixon program - the one rejected by the PCIMP - must be included. The program must recognize "relative catastrophic costs," and deal with them. Both the staff of the PCIMP and the Nixon CHIP considered medical costs exceeding $1,500 in any year as catastrophic for the average American with an adjustment relative to income for those families having less modest incomes. Today, the $1,500 figure probably would be in the order of $10,000, with a greater number of Americans qualifying for adjustment.

To the extent that government has a role to play in the "expedient program," it needs to be the insurer of last resort, a "re-insurer." Private plans will continue to provide base coverage, but under this extension, they will be able to buy into the reinsurance and thus be able to avoid the problem of accepting persons who have existing conditions. The alternative suggested by President Barack Obama is a public option. Conservative Democrats and Republicans oppose such a plan as a "foot in the door" for a single-payer plan. They claim that a public option will, per force, be able to compete at a lower cost than private plans and drive those plans out of business. Allowing insurance companies to buy into reinsurance, or allowing the public to buy catastrophic insurance that is related to income, may be the only way to get the concept of national health coverage to realization.

Murray Tucker, Ph.D.

Steamboat Springs


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