This week’s “Daily Journal” guest columnist is Joseph Coletti, fiscal and health care policy analyst for the John Locke Foundation.
While President Obama is offering the postal service of health care, we at the John Locke Foundation have begun a statewide tour talking about consumer-driven health care which actually improves care and lowers cost. In other words, consumer-driven care is more like the FedEx or UPS of health care.
Our first two events, in Asheville and Charlotte, have been to capacity crowds of business owners and others who want to get control of the cost, quality, and choice of their health care. We have four more luncheons planned in the next two weeks in Winston-Salem, Wilmington, Cary, and Greensboro, likely with the same kind of response.
Consumer-driven health care has a proven ability to reduce costs while maintaining or improving the care received by patients. Studies have found that people with consumer-driven plans are more likely than those with more traditional insurance to use online tools to find quality and cost information on doctors. They’re also more likely to listen to their doctors, purchase generic medications, and improve their health habits.
Patients with consumer-driven health plans become their own advocates (pdf link). They do not have someone from an insurance company, government agency, or independent commission of experts second-guessing the decisions they make with their doctors or pharmacists. Instead of fighting insurance company red tape, people can choose to pay more on their own for the branded medicine that works better for them than the generic version. They can also ask their doctor for a generic medicine when the branded version is too expensive.
For all their promise, though, consumer-driven health plans are just a first step toward a fully functioning health care market. Health care is nowhere near being a market. Americans pay on average just 13 percent of health costs from their own pockets. Government and insurance companies pay the rest, so they make many of the decisions about care, too. Among those not enrolled in Medicare, Medicaid, TriCare, or one of the other government programs, most have their insurance chosen for them by their employers.
Tax Equity: The next step in reforming health care is to equalize the tax treatment of insurance purchased in the individual market and insurance purchased through an employer. When somebody rejects their employer’s plan, they pay a tax penalty for their decision. There are a number of ways to bring about equal treatment — providing tax credits for individuals who purchase insurance on their own instead of through their employer, exempting all health insurance or health care costs from income taxes, or expanding health savings accounts (HSAs) and easing the rules on them so individuals can put more money in and use it for all health expenses including insurance premiums.
Tax equity alone, over time, can go a long way toward accomplishing the goals of lower costs and greater access. Health insurers do not advertise, but car insurers do. Car insurance is subject to varying state regulations, but insurers sell coverage one policy at a time. There are no self-insured companies that avoid most regulations, and no agents can make a sale to a company’s human relations department.
Fewer mandates: Allow consumers to purchase only the insurance benefits they want, not the ones they don’t. Many mandated types of coverage that state governments impose would be offered anyway, but other mandates add cost with no benefit. At least a fifth of people without health insurance can afford it but choose not to purchase it. The reason many give is that it is too expensive. States should reduce the number of mandates they impose, which in North Carolina (pdf link) include marriage therapists and pastoral counseling.
Interstate purchases: Allow consumers to purchase insurance from any state in the country. Someone like me purchasing the lowest-cost insurance option in St. Louis could save $504 a year in premiums over the lowest-cost insurance in Cary. Purchasing insurance in St. Louis for an entire family like mine could save $1,320 a year. The coverage might not be exactly the same, and doctors in North Carolina would be out-of-network, but the annual savings are hard to ignore.
More providers: Allow providers to do what they are trained to do without arbitrary limits such as scope-of-practice regulations within state licensing and certificates of need for capital investment.
Medical liability reform: Allow prices to signal quality. Doctors with strong records may be willing to provide large monetary guarantees against harm that is a result of their mistakes. Less skilled doctors or those with less experience may not be able to offer the same guarantees, but may be willing to provide care at a lower price. This depends again on having consumers making decisions instead of insurance companies or the government setting prices.
Companies and individuals already have the ability to reform health care for themselves. Some small changes, none of which would require anywhere near 1,000 pages of legislation, could have transformative effects while recognizing that no person or group of people is going to have all the answers for everyone.