In my last blog, Health-Care Reform Hurts the Constitution: Part II, I explored the history of so-called reform and the consequences thereof. I provided evidence that government intrusion not only historically has not helped reduce cost, but rather has caused costs to increase precipitously. In this installment, I would like to take a constructive approach and offers some free-market solutions to the the issues we have with health-care. There are actually two main issue that current legislation aims to address: coverage for the uninsured, and lowering health-care cost for the consumer. Before we tackle these issues, let me be clear about one thing: this present situation is just as much the fault of the Republicans as it is the Democrats. By refusing to deal with the escalating costs of health-care, Republicans effectively allowed liberals to frame the debate on their own terms. As the saying goes, “lead, follow, or get out of the way.” The GOP is just now trying to lead; however they lack the numbers, the voice, and any political momentum and have found that their pleadings are falling on deaf ears. Yet there are market-based solutions. Ironically, it was President Obama who alluded to this approach. In March 2009, President Obama said, "If there is a way of getting this done where we're driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I'd be happy to do it that way." Really? So where is that approach, and where has it been for the past 40-50 years? It’s been stuffed in the closet and held hostage by our federal government, and its muffled cries are begging to be heard. To this end, I offer the following as potential alternative to the currently proposed health-care legilsation:
1. The federal government can provide vouchers to the neediest in society, starting with Medicare recipients, and then in a short period of time, include other uninsured. This would allow them to choose a policy they feel comfortable with, psychologically and financially. It is also worth mentioning that his is same approach we use to help those in poverty by providing food stamps.
2. Allow individuals to purchase and retain health-insurance policies that they keep as their own, much like a life insurance plan. This would free individuals to not only maintain control over their finances and health, but remove the punitive mechanism that forces individuals to feel trapped in an undesirable job just to maintain health-care coverage. Moreover, people with individually purchased plans should have the same tax advantages as those receiving employer-sponsored plans. As, John Mackey, co-founder and CEO of Whole Foods Market Inc. suggest, "let's equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits."
3. Congress should allow an expanded tax-free contribution to Health Savings Accounts (HSAs), which would result in a massive tax cut that would end up funding the cost of insuring those most in need, all without creating further economic wedges. Current legislative proposals aim at restricting this, which once again deprives the individual of free choice, thereby violating the Constitutional guarantee of “pursuit of happiness.”
4. Congress should allow consumers to purchase health insurance across state lines, leading to competition, which is a proven mechanism to lower costs. Our government could then offer tax incentives to insurance companies to form nationwide consortiums that would allow individuals to take part in consumer pools in order to provide access to those receiving vouchers. This is similar to the the health-care exchanges that the current Senate bill is proposing, with one big difference: it would allow and promote insurance companies to take the lead in the formation and would not be subject to heavy regulation and the imposition of federal bureaucrats or their political proxies.
5. The most important issue is to reshape the way plans are structured to match the true idea of what insurance is about, which is to manage catastrophic or significant risks. The insurance plans currently available often cover such a wide array of services, many of which are never utilized by a policyholder. Predictably, government is again responsible, mandating and dictating to insurance companies what they can and should cover. In contrast, if we were to create a flexible, tiered, transparent system of policies set at different levels of consumer affordability, the individual could make an informed choice as to which policy best meets his or her needs. Much of the cost could then be offset by HSAs, which could be partially funded by employers through tax-exempt matching funds that would otherwise be spent on underutilized health plans.
6. To directly control the cost, let’s create a significant tax credit or deduction for doctors that willingly see patients struggling with finances, and create a parallel process for pharmaceutical companies willing to provide medication at a reduced or no costs.
7. Streamline medical paperwork. According to the 2008 Dartmouth Atlas of Health Care, $210 billion dollars is wasted each year on medical paperwork. This is because of the myriad of plans and their enumerated clauses. This is where the insurance industry can take the lead by providing some sort of uniform codifying mechanism to address this issue. Let's face it, if colleges can agree upon two standardized admissions tests, surely the insurance industry can work together volitionally to align language, forms, and codes. The insurance industry should realize that if they don't, Congress will.
8. Use present hospital exemplars to model reform around. Point in case: The Cleveland Clinic, which leverages technology and modern management tools to improve both efficiency and care for patients. This organization has created a new protocol by revolutionizing how it organizes patients. Rather than categorizing its patients according to medical specialties, The Cleveland Clinic created 25 "institutes" organized by disease or organ system. The clinic also uses evidence-based medicine to make decisions, and publicizes its results. This is not just about transparency, but is concerned with analysis of quality and efficiency of delivery of services, both which benefit the patent and consumer. Again, hospitals need to work together in common interest and in a volitional manner, or government will step in with ill-conceived regulatory practices, which will ultimately lead to inefficiencies and growing costs.
Finally, let’s not stick our heads in the sand and pretend that there are not people who are struggling with health-care affordability. Physicians need to be willing to treat those in need by reducing their costs, and government needs to back off and allow doctors to set their own prices without undue interference. And the truth is, this was the norm before government got involved. It is all too easy to turn a blind eye to our brothers and sisters who are suffering when we all rely on government to do the job. Let’s put health-care back where it belongs: in the hands of the consumers and the doctors.
