Why not base health care reform on policies that work? 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 listen to their doctors, purchase generic medications, improve their health habits, and use online tools to find quality and cost information on doctors.
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 for the branded medicine. They can, and often do, ask their doctor for the generic alternative.
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.
Five other reforms, none of which requires 1,000 pages of legislation, are also needed.
Tax equity: Eliminate the tax penalty for not getting insurance through an employer. Tax credits or exemptions are one way to achieve this. Congress could also expand health savings accounts (HSAs) and ease the rules on them so individuals can put more money in the accounts and use them for all their health expenses, including insurance premiums.
Tax equity alone, over time, can go a long way to accomplishing the goals of lowering costs and expanding access. Health insurers may 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 the human resources department of a company.
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 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.
Tort 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.
Joseph D. Coletti is fiscal and health care policy analyst at the John Locke Foundation in Raleigh (johnlocke.org).