Trumpeting the straw-man argument that “doing nothing is simply unacceptable,” U.S. lawmakers continue to advocate a frighteningly sweeping government takeover of American health care. Those Democratic senators who dare to hesitate a bit before voting for this takeover are characterized as “moderates.” Yet their initial votes — made a whole three days after the unveiling of a 2,000-page bill that pushes a radical overhaul of the world’s most advanced health-care system, a bill opposed by the majority of American voters, and at a cost of a trillion dollars paid by massive taxes, penalties, and cuts in coverage — in the end were a loud and unanimous “yes” to proceed. Ultimately, these “moderate” senators merely wish to tinker with a grossly flawed plan that hemorrhages money, rather than thoughtfully consider alternatives and preserve the excellence of our medical care.
All the while, several obvious, commonsense reforms that would benefit American citizens have been stonewalled. Reforms that can bring health costs down without imposing government restrictions and mandates are being ignored, as if they just don’t exist. Americans should ask their elected officials why commonsense reforms that would increase health-insurance competition and reduce costs are being disregarded. Let’s consider six such reforms.
First, Congress should create a national market for health insurance, so people can shop for insurance they actually want to buy at competitive prices. It is inexplicable and contrary to the goal of encouraging competition that Americans are forced to confine their health-insurance purchases to in-state plans. We already know that such limits have created near monopolies, which reduce choice and propel prices higher. The AMA’s 2008 Competition in Health Insurance study showed that almost 90 percent of the 314 metropolitan areas (MSAs) have a single health plan with a market share greater than 30 percent. In two-thirds of those, one health plan has more than 50 percent share, and in just under one-fourth, one health plan has a share greater than 70 percent. For example, two health plans have a combined 76 percent share in Burlington, Vt.; two plans hold a combined 91 percent share in Cedar Rapids, Ia.; and two plans hold a combined 88 percent share in Columbia, Mo. In Alabama MSAs, the share is as high as 97 percent held by one plan. In a 2004 study, James Robinson found that in a majority of states, the top five insurers account for more than 50 percent of enrollees, and in many instances account for more than 65 percent. Already, most markets within the United States are dominated by one or two large health plans, leaving little opportunity for meaningful competition. Government action can immediately lower the price of health insurance through the private-insurance market by breaking down these anti-competitive barriers that are responsible for huge state-to-state variations in prices for identical health coverage.
Second, rather than increase mandates and create a powerful government health-insurance exchange, it is time to eliminate the government mandates that have severely distorted our health-insurance markets. State-based mandates alone now number over 2,100 and are a flagrant abuse of government power. They increase insurance costs by up to 50 percent and force Americans to buy policies covering massage therapy, acupuncture, in vitro fertilization, wigs, chiropractors, and other services not necessarily wanted by more than a small minority. State governments can immediately start repealing these costly and ill-advised regulations. If elected officials are really interested in expanding choice, they should promote flexibility in coverage, rather than impose additional controls over appropriate coverage.
Third, government can empower individual Americans and their families by revamping the tax treatment of health-care expenses, so that all Americans can become shoppers for their health insurance. A federal system of refundable health-care tax credits would introduce personal ownership and portability of insurance and increase the market competition that the Obama administration and Democrats claim to support. The essential portability of insurance — owned and chosen by Americans themselves — would eliminate the fear of job loss and exposure to financial disaster by loss of coverage, and would create a huge new group of value-seeking shoppers for insurance. This single policy change would reduce health expenditures by hundreds of billions of dollars, while eliminating the crippling burden of health costs on American businesses created by historical accident rather than thoughtful intention.
Fourth, policymakers should expand the availability of, and simplify the rules pertaining to, lower-cost health plans with health savings accounts (HSAs), such as high-deductible plans for catastrophic coverage. These plans should be promoted, not prohibited (as they are in the Reid legislation). High-deductible plans make insurance a good value, especially for the millions of younger Americans who can afford insurance but currently (and wisely) choose to forego buying something they consider a poor value. Millions of Americans have already chosen to get HSAs, because they expand individual control over health spending, promote price visibility to allow value-based purchasing, encourage healthy lifestyles, and provide incentives for savings to prepare for future health-care needs. Instead of eliminating these options, Congress should permit more flexibility in alternative employer contributions (such as “disease management accounts”) and support tax-reform proposals that allow parents to transfer HSA balances from their own accounts into their children’s accounts.
Fifth, government should force transparency on hospitals and doctors, so Americans have information about physician credentials, care quality, and treatment options, which would help them to make informed, value-based decisions. While we should let the experts, doctors and scientists, determine clinical efficacy, government should require that all health-care providers and hospitals who receive payment from any public-insurance program — including Medicare, Medicaid, CHIP, and the Federal Employees Health Benefits Plan — to provide fully transparent quality and price information to patients before administering care. Public knowledge of price would encourage competitive pricing by both hospitals and doctors. The current lack of demand for prices among patients (who believe that “someone else is paying”) has allowed hospitals and doctors to cloak their price structure in a shroud of mystery and avoid public view. Price visibility is essential to induce competition, yet Congress has ignored the issue.