Consumers, not just in the United States but in all developed countries, are demanding a much greater role in decisions involving their health care. People can find on the Internet a wealth of information about diseases, diagnoses, and treatment options, but all too often they must fight bureaucracies and paperwork all along the way.
Studies have shown outcomes improve if people are given the tools, information, and incentive to manage their own health care.
Meanwhile, our system of tying health insurance to the workplace is becoming antiquated as the nation’s workforce becomes increasingly independent and mobile. The U.S. Department of Labor reports four in 10 Americans change jobs every year. This makes it extremely difficult to tie health insurance to the workplace and expect people to have continuity of coverage.
We need a system that allows people to have health insurance that is portable, that they can own and control, and that they, and not a politician or a human resources department, decide is right for them and their families.
Consumer-Oriented Solutions
For the past six years, the U.S. health care sector has been moving toward more market-based solutions, introducing patient choice and competition into a system that had been largely dominated by top-down, centralized management. Here are a couple of very familiar examples:
- Consumers have new incentives to become partners in managing their health costs through financing options such as health savings accounts and company-based Health Reimbursement Arrangements. Individuals and companies are saving money on health costs as a result.
- Choice and competition have been introduced in public programs such as Medicare and Medicaid, showing people can choose among competing health plans that have new incentives to offer better benefits at lower costs.
Threats to Market
Competition is working, but there are threats on the horizon. The current Congress has set a clear agenda involving expansion of government health care programs and cutting back the initiatives begun over the past several years to bring more competition and patient choice into private and public programs.
Key committee chairmen want to expand government coverage of children, putting children in families earning up to $83,000 a year and “children” as old as age 25 into government-run plans. In addition, Sen. Edward M. Kennedy (D–MA) has said his top priority is to enact legislation that would put all Americans on government-run health care through Medicare-for-All.
Others are working to expand Medicaid to more middle-income Americans, shifting tens of millions more Americans into government health care.
Changing the Conversation
The health care initiative President George W. Bush offered during his State of the Union address in 2007, by contrast, was very innovative and took the policy community by surprise with its boldness.
The president described his basic philosophy to enthusiastic applause on both sides of the aisle when he said, “In all we do, we must remember the best health care decisions are made not by government and insurance companies, but by patients and their doctors.”
This was a major step in the effort to redirect the health policy debate. No longer are we simply talking about how much or how little to expand government programs. We now can have a national debate over how to engage the power of consumers in transforming our health sector to become more efficient, more responsive to their needs, and more affordable.
In addressing the core problem of our current dysfunctional tax treatment of health insurance, the president won support from The Washington Post, The Wall Street Journal, and experts from think tanks as traditionally divergent as the Urban Institute and The Heritage Foundation.
Concerns About Change
Does everyone like this new direction? No, of course not. Consumer-driven health care (CDHC) is such a new and creative idea that it will take time for people to analyze and digest the plan and its implications.
- Many are fearful it will accelerate the decline of employment-based health insurance by giving a tax break to individuals who buy coverage on their own. But job-based coverage already is declining. CDHC will give employers and employees a new negotiating tool to bargain for insurance that offers the best value.
- Others say CDHC doesn’t do enough for the uninsured and that tax credits would be better than a tax deduction. Using some of the “Affordable Choices” money allotted by Bush to help states make basic private health insurance available to those who cannot afford it, states can put new resources on the table to provide state-based tax credits, vouchers, or other new subsidies to the uninsured to supplement the federal tax break.
Benefits of Reform
This is the bottom line: A market-based solution to the health care crisis is a win/win/win:
- It is a win for the uninsured because millions more Americans would have the chance to buy health insurance.
- It is a win for states because they would have more flexibility to direct federal resources to meet the needs of citizens to get affordable health insurance.
- It is a win for employees because they would have the opportunity to buy health insurance they can own and take with them from job to job, giving them more control over decisions involving their health insurance and health care.
Sharpening the Debate
This idea sharpens the debate between those who believe the answer to the problems in the health sector lies in much more government involvement through expansion of public programs, and those who believe the market can and does have much more potential to bring down health insurance costs and provide people with greater access to coverage and more choices.
Incentives work, and competition works. What we need to do is engage the power of consumers to transform our health sector to become more efficient, more responsive to consumer needs, and more affordable.
Grace-Marie Turner ([email protected]) is founder and president of the Galen Institute. This article is based on a speech given at The Heritage Foundation on May 4, 2008.
