Kevin Price
Health care reform does not have to be expensive
By Kevin Price
I have to preface this by pointing out that I remain convinced that the US Constitution — that nifty document that politicians swear to defend — is the first obligation to the health care debate. According to that document, the issue of health care is to be left to the states and the citizens. Health care is simply too important for the federal government to pursue. It requires many approaches to find a plan that would work. However, the reality is, the federal government already plays a huge role in health care. It has long been my contention that any discussion on reform should begin with the damage that government has already done.
Dr. John Goodman, President of the National Center for Policy Analysis, has written a report that addresses the government impact well and should be part of the debate. He examines ten different areas that should be addressed in any health care discussion.
1. Free the Doctor. "Medicare pays for more than 7,000 specific tasks, and only for those tasks. Blue Cross, employer plans and most other insurers pay the same way. Notably absent from this list are such important items as talking to patients by telephone or e-mail, or teaching patients how to manage their own care or helping them become better consumers in the market for drugs. Further, as third-party payers suppress reimbursement fees, doctors find it increasingly difficult to spend any time on unbillable services. This is unfortunate, since it means that doctors cannot provide the type of low-cost, high-quality services that are normal in other professions." Instead of merely behaving as repair providers, medical doctors should have incentives to restore their role of health care advisor.
Goodman goes on to point out that, in order to "change these perverse incentives, Medicare should be willing to pay for innovative improvements that save taxpayers money. And doctors and hospitals should be able to repackage and reprice their services (the way other professionals do), provided that the total cost to government does not increase and the quality of care does not decrease. This change in Medicare would almost certainly be followed by similar changes in the private sector."
2. Free the Patient. Goodman states that "many patients have difficulty seeing primary care physicians. All too often, they turn to hospital emergency rooms, where there are long waits and the cost of care is high. Part of the reason is that third-party payer (insurance) bureaucracies decide what services patients can obtain from doctors and what doctors will be paid. To correct this problem, patients should be able to purchase services not paid for by traditional health insurance, including telephone and e-mail consultations and patient education services. This can be done by allowing them to manage more of their own health care dollars in a completely flexible Health Savings Account." Some of these things seem very obvious to me. The health care system is plagued by a "penny wise, dollar foolish" approach to medicine.
3. Free the Employee. It is imperative to move the selling of health insurance from a "one size fits all" group approach to one in which people can buy want they want and, more importantly, take it with them when they leave.
4. Free the Employer. In the same vein, Goodman notes that employers should be allowed to be in a system where they can "make a fixed-dollar contribution to each employee's health insurance each pay period. Like 401(k) accounts, the health plans would be owned by employees and travel with them as they move from job to job and in and out of the labor market."
5. Free the Workplace. The system needs to be changed to allow greater flexibility in the purchase of insurance, which would encourage more people to get covered. For example, if an employee has a spouse with health coverage, it would be helpful if the employer could give another benefit. But, Goodman points out, "the law does not allow her employer to pay higher wages instead. On the other hand, a part-time employee might be willing to accept lower wages in return for the opportunity to enroll in the employer's health plan. The law does not allow that either." The answer is pretty simple, companies "should be free to give employees the option to choose between benefits and wages, where appropriate."
6. Free the Uninsured. People who must purchase their own insurance should receive the same tax relief as employees who obtain insurance through an employer. The way pre-taxing works is simple. The amount that is paid for health insurance is simply subtracted from gross wages for tax purposes. This would be a huge and cost effective benefit to individuals seeking coverage.
7. Free the Kids. The increase in the States Child Health Insurance Plan (S-Chip) will actually move 4 million kids into government health care programs where, as Goodman notes, "children have access to fewer doctors and medical facilities than children in private plans."
He argues that these limitations alone means that "incentives should be reversed. S-CHIP money should be used to encourage parents to enroll their children in their employer's plan or another plan of the parents' choosing."
8. Free the Parents. Goodman points out that, "Under the current system, a child could be enrolled in S-CHIP, a mother could be enrolled in Medicaid and a father could be enrolled in an employer's plan. However, medical outcomes are likely to be better with a single insurer." Instead, the system should be designed to support a single insurer. Therefore the government programs "should be used to subsidize private health insurance, so that low-and moderate-income families are able to see the same doctors."
9. Free the Chronically Ill. For this particular issue, Goodman provides a comprehensive approach: "Under current regulations, insurers are not allowed to adjust premiums to reflect higher expected health care costs. This encourages insurers to seek the healthy and avoid the sick before enrollment. After enrollment, insurers have an incentive to over-provide care to the healthy and under-provide to the sick. These incentives need to be reversed. For example, in the Medicare Advantage program, the government pays higher premiums for seniors with more expensive health needs. This encourages insurance companies to create specialized plans — especially for chronic illnesses — that compete with each other." The solution? "Chronic patients also need to be able to manage more of their health care dollars directly. For example, 'Cash and Counsel' programs in many states allow home bound, disabled Medicaid patients to hire and fire the vendors who provide them with services." Programs such as this provide almost 100 percent patient satisfaction.
10. Free the Early Retiree. "Most baby boomers will retire early, before eligibility for Medicare. Two-thirds will not get health insurance from their former employer and even those who have been promised employer coverage may see those promises broken, since there is almost no prefunding of benefits. Under current law, an employer can include early retirees in its regular health plan, but cannot contribute to more economical, individually owned plans." In the spirit of the portability argument mentioned before, the government should make it easier for individuals to have many options and to take them with them wherever they go. This would enhance competition and drive down prices.
Ten simple steps that would expand the availability of coverage and actually lower the costs for all concerned. This is simple common sense, which is why the government is not seriously weighing these type of reforms.
© Kevin Price
September 3, 2009
I have to preface this by pointing out that I remain convinced that the US Constitution — that nifty document that politicians swear to defend — is the first obligation to the health care debate. According to that document, the issue of health care is to be left to the states and the citizens. Health care is simply too important for the federal government to pursue. It requires many approaches to find a plan that would work. However, the reality is, the federal government already plays a huge role in health care. It has long been my contention that any discussion on reform should begin with the damage that government has already done.
Dr. John Goodman, President of the National Center for Policy Analysis, has written a report that addresses the government impact well and should be part of the debate. He examines ten different areas that should be addressed in any health care discussion.
1. Free the Doctor. "Medicare pays for more than 7,000 specific tasks, and only for those tasks. Blue Cross, employer plans and most other insurers pay the same way. Notably absent from this list are such important items as talking to patients by telephone or e-mail, or teaching patients how to manage their own care or helping them become better consumers in the market for drugs. Further, as third-party payers suppress reimbursement fees, doctors find it increasingly difficult to spend any time on unbillable services. This is unfortunate, since it means that doctors cannot provide the type of low-cost, high-quality services that are normal in other professions." Instead of merely behaving as repair providers, medical doctors should have incentives to restore their role of health care advisor.
Goodman goes on to point out that, in order to "change these perverse incentives, Medicare should be willing to pay for innovative improvements that save taxpayers money. And doctors and hospitals should be able to repackage and reprice their services (the way other professionals do), provided that the total cost to government does not increase and the quality of care does not decrease. This change in Medicare would almost certainly be followed by similar changes in the private sector."
2. Free the Patient. Goodman states that "many patients have difficulty seeing primary care physicians. All too often, they turn to hospital emergency rooms, where there are long waits and the cost of care is high. Part of the reason is that third-party payer (insurance) bureaucracies decide what services patients can obtain from doctors and what doctors will be paid. To correct this problem, patients should be able to purchase services not paid for by traditional health insurance, including telephone and e-mail consultations and patient education services. This can be done by allowing them to manage more of their own health care dollars in a completely flexible Health Savings Account." Some of these things seem very obvious to me. The health care system is plagued by a "penny wise, dollar foolish" approach to medicine.
3. Free the Employee. It is imperative to move the selling of health insurance from a "one size fits all" group approach to one in which people can buy want they want and, more importantly, take it with them when they leave.
4. Free the Employer. In the same vein, Goodman notes that employers should be allowed to be in a system where they can "make a fixed-dollar contribution to each employee's health insurance each pay period. Like 401(k) accounts, the health plans would be owned by employees and travel with them as they move from job to job and in and out of the labor market."
5. Free the Workplace. The system needs to be changed to allow greater flexibility in the purchase of insurance, which would encourage more people to get covered. For example, if an employee has a spouse with health coverage, it would be helpful if the employer could give another benefit. But, Goodman points out, "the law does not allow her employer to pay higher wages instead. On the other hand, a part-time employee might be willing to accept lower wages in return for the opportunity to enroll in the employer's health plan. The law does not allow that either." The answer is pretty simple, companies "should be free to give employees the option to choose between benefits and wages, where appropriate."
6. Free the Uninsured. People who must purchase their own insurance should receive the same tax relief as employees who obtain insurance through an employer. The way pre-taxing works is simple. The amount that is paid for health insurance is simply subtracted from gross wages for tax purposes. This would be a huge and cost effective benefit to individuals seeking coverage.
7. Free the Kids. The increase in the States Child Health Insurance Plan (S-Chip) will actually move 4 million kids into government health care programs where, as Goodman notes, "children have access to fewer doctors and medical facilities than children in private plans."
He argues that these limitations alone means that "incentives should be reversed. S-CHIP money should be used to encourage parents to enroll their children in their employer's plan or another plan of the parents' choosing."
8. Free the Parents. Goodman points out that, "Under the current system, a child could be enrolled in S-CHIP, a mother could be enrolled in Medicaid and a father could be enrolled in an employer's plan. However, medical outcomes are likely to be better with a single insurer." Instead, the system should be designed to support a single insurer. Therefore the government programs "should be used to subsidize private health insurance, so that low-and moderate-income families are able to see the same doctors."
9. Free the Chronically Ill. For this particular issue, Goodman provides a comprehensive approach: "Under current regulations, insurers are not allowed to adjust premiums to reflect higher expected health care costs. This encourages insurers to seek the healthy and avoid the sick before enrollment. After enrollment, insurers have an incentive to over-provide care to the healthy and under-provide to the sick. These incentives need to be reversed. For example, in the Medicare Advantage program, the government pays higher premiums for seniors with more expensive health needs. This encourages insurance companies to create specialized plans — especially for chronic illnesses — that compete with each other." The solution? "Chronic patients also need to be able to manage more of their health care dollars directly. For example, 'Cash and Counsel' programs in many states allow home bound, disabled Medicaid patients to hire and fire the vendors who provide them with services." Programs such as this provide almost 100 percent patient satisfaction.
10. Free the Early Retiree. "Most baby boomers will retire early, before eligibility for Medicare. Two-thirds will not get health insurance from their former employer and even those who have been promised employer coverage may see those promises broken, since there is almost no prefunding of benefits. Under current law, an employer can include early retirees in its regular health plan, but cannot contribute to more economical, individually owned plans." In the spirit of the portability argument mentioned before, the government should make it easier for individuals to have many options and to take them with them wherever they go. This would enhance competition and drive down prices.
Ten simple steps that would expand the availability of coverage and actually lower the costs for all concerned. This is simple common sense, which is why the government is not seriously weighing these type of reforms.
© Kevin Price
The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
(See RenewAmerica's publishing standards.)
