RALEIGH — It’s official: health care is among the top issues on voters’ minds as they begin to turn their attention to the 2004 elections. Pollsters say so. The news media are saying so. Politicians are responding with a host of new promises — on top of all the old ones that can’t be fulfilled over time (like the nearly bankrupt Medicare program and the clearly bankrupting Medicaid program) and the recent ones on prescription drugs that seem already to have been forgotten by voters.
I guess what confuses me about the politics of health care is the lack of specificity as to what voters expect public officials to do about it. Sure, we know what the problems are. Employers and employees are struggling with renewed inflation in the cost of health plans. Taxpayers are struggling to keep up with surging demand and cost in public-sector programs. Doctors dislike “interference” in medical decisions by insurers. Patients worry about the cost of prescription drugs as well as the potential availability of new drugs to treat their illnesses.
But if all American voters mean by “address health care” is that they want the government to deliver it, finance it, or regulate its cost, then their sentiment is nothing more than a dressed-up demand for income redistribution. The “government” has no money. Taxpayers have money. Governments exist to do coercive things. If you want the government to give you free or cheap health care, what you really want politicians to do is force some of your fellow citizens to pay for their own health care and for your health care.
If, on the other hand, American voters have the sense that their choices within the medical marketplace are unnecessarily constricted and unnecessarily costly, then the government can address the problem without having to expand the income-redistribution schemes they already operate, and preferably while reducing said schemes. For example, the federal and state income-tax codes warp the market for health care by imposing punitive levies on people who buy their own medical services and (though this is improving somewhat) their own health plans. Additional government-imposed regulations and premium taxes made it hard for individuals to own their own plans and make their own decisions, which is the real answer to the problem of controlling cost without depriving people of needed health care.
For all its faults, the new Medicare legislation has authorized health saving accounts to give Americans more latitude to take the same tax deductions for their medical savings and spending as they — and to a larger extent their more-affluent peers working at large companies — have enjoyed for years with regard to employer-based health plans.
Patients spending their own money from their own accounts, and more to the point have an incentive not to spend their own money in their own accounts, will promote efficiency without sacrificing health outcomes. That’s what the RAND Corporation found years ago with a study that examined cash-based systems for patients seeking routine medical expenses (obviously insurance products kick in for more expensive treatments and surgeries). The RAND folks found in that study that patients spending their own money tended to spend an average of 30 percent less than their fully insured peers without scrimping on truly necessary preventive care.
Now, research just released by the health insurer Aetna has demonstrated a similar effect. Last year, some 14,000 Aetna customers moved from a traditional PPO approach to a HealthFund program offering more financial incentives and personal choice. The result was that the cost of treating these subscribers grew by only 1.5 percent from January to September of last year, compared with a double-digit increase during the same period in 2002. Preventive-care visits actually increased while more than half of them had money left over in their HealthFund accounts to roll over into 2004. Virtually everyone said they would prefer to renew their savings-based plan rather than going back to the old version.
If voters want more power, more control, more options, and more savings, the good news is that politicians can certainly deliver without picking someone else’s pocket. All they have to do is get themselves, and their biased tax and regulatory policies, of the way.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.