Jane Galt's health plan

Have the government pay for all health care expenditures above 15% of adjusted gross income, and cover 100% of health care expenditures by people living under 200% of the poverty line.

This preserves the market in most health care services--happy HSA advocates! It is progressive, and provides universal coverage--happy single-payer advocates! It directs coverage to those who really need it--the very sick--without a middle class subsidy--happy Jane! And it preserves market prices for almost everything from hospital beds to surgical procedures, since a significant fraction of the market will be paying their own way. That keeps the government from having to set prices, which as Soviet Russia showed us, is generally a bad idea. Most importantly (from my perspective) it preserves the market for innovations in drugs and medical equipment.

Here is the full post.  My guess is that this needs to be defined across wealth rather than income, if only to a) cover the retired elderly, and b) prevent people from tanking their incomes when family members get sick.  It could therefore resemble extreme means-testing for Medicare, one of my favorite ideas.  Except it would treat young and old on the same plane.

One worry I've had about means-testing is the implicit tax hike on wealth creation.  How steeply would this implicit tax rise, as health care consumes a growing percentage of gdp?  And when suppliers are charging the often-identifiable eligibles (what percent of the population lies below 200% of the poverty line, and how do they dress?), what kind of controls must we impose on the contracts?  Would any doctor or hospital down here in Cajun country have free prices?  If the government set prices too low, would these noble crawfish-boilers end up with greater access to care?

Addendum: Read her post on why HSAs and single-payer plans are unlikely to lower health care costs.  Second addendum: Read Arnold Kling as well.