Medicaid Cuts & Subsidiarity

Medicaid Cuts & Subsidiarity by Michael Sean Winters

Medicaid is actually three programs. With the passage of the ACA, it will be the chief health insurance provider for the working poor. It is the payer of last resort for Seniors in nursing homes. Finally, it cares for the chronically poor who don't work - either due to medical reasons or illiterarcy - which makes it a target for those whose Christianity includes the Protestant work ethic (and those Catholics who have bought into that, through Rand).

The Senior portion should simply be fedralized - which Reagan offerred to do in New Federalism in 1982 (in an echo of Nixon's proposal). Ryan is probably too young to remember the Gipper's proposal. More's the pity.

Health care for the working poor should probably be provided through employers rather than Medicaid. The way to force this is not a mandate but a tax deduction (which would also be how to get employers to cover retirees - including the chronically ill). Taxes on employers could be consolidated from personal income taxes on all but the wealthiest, the Hospital Insurance payroll tax and the corporate income tax into a Value Added Tax (to cover discretionary spending) and a Net Business Receipts Tax. The NBRT would be like a VAT, but would not be on the receipt because businesses would have the option of taking deductions for family support, education and health care costs for employees and retirees. The tax should be set high enough that even marginal employers would have an interest to offer care rather than have employees use a "public option."

Such a plan would meet the needs of subsidiarity. It could not be entirely voluntary, however. If voluntary charity could meet social needs, coffers would be full for this purpose since tax rates for the wealthy are at historic lows. (A parallel is the current evidence aganist supply side economics - which, if true, would have led to historically low unemployment as employers are flush with cash).

Libertopia could exist, however it takes a high nominal tax rate on business to get us there.