Opinion

Healthcare reform doesn't have to be a federal trap

We can control costs without rationing care or making people buy insurance.

By

The controversial end-of-life counseling provision will probably be stripped from a final health reform bill. But even so, the broader tension between ever-rising healthcare costs and federal budget constraints – which inevitably leads to rationing – needs resolution, and soon.

We can resolve this tension without giving government even more control over our healthcare.

Claims that a "public" insurance plan (which itself may be dropped) would ration care and deny treatment aren't scare tactics – they're conclusions drawn from the record.

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Take Medicare. It already denies seniors 1 of every 10 claims for service. What proportion will be rejected in eight years, when Medicare's hospital insurance trust fund assets are expected to be exhausted: 5 out of 10? Nine out of 10?

As healthcare costs outpace other areas of spending, the government will inevitably look for cuts. The Medicare program is already the largest single-payer health program in the world – accounting for $468 billion in 2008. And within Medicare, care in the last year of life accounts for about one-quarter of costs. If you were overseeing Medicare's budget, wouldn't you target those expenditures for cost control?

Given that Medicare is headed for bankruptcy, why would we take steps that would massively increase government's role in healthcare? Wouldn't this exacerbate the problem of denied care for seniors?

Socialism is appealing to some because things are paid for with someone else's money. But when it comes to government healthcare, having someone else pay means having someone else decide. In the leading health reform bill (H.R. 3200), a panel of up to 27 medical and other experts chaired by the Surgeon General will recommend (with public input) what benefits to cover. This concentrates a huge amount of decisionmaking power in very few hands.

Let's drop the push for nationalizing healthcare and instead provide strong tax incentives to encourage individuals and families to be responsible for choosing and owning health insurance coverage, while also maintaining a safety net for those who can't afford it. Tax law encourages most people to rely on employers for health insurance, thereby insulating consumers from costs. Yet, we don't rely on employers to purchase automobile insurance, life insurance, or homeowners insurance. And we aren't facing a national crisis regarding affordability for those insurance premiums.

If we are serious about reducing healthcare costs to help make services affordable and available to all, we need policies that create true competition in health insurance, and that encourage consumers to be cost conscious. Congress should level the playing field by allowing everyone to deduct the full costs of health insurance, regardless of whether they buy it on their own or receive it through an employer. A refundable tax credit could be provided for those with no tax liability.

Moreover, state Medicaid programs currently available for low-income children and adults could continue to serve as a voluntary public option. Recipients could be given the option of staying in that system or receiving a voucher for private insurance if they find such plans provide better coverage for comparable costs. And state-based risk pools should be created to guarantee coverage for those with preexisting conditions or other reasons that make buying insurance impossible.

All told, everyone would be offered opportunities for buying health insurance, including assistance for low-income persons via Medicaid. But no one would be forced to buy insurance. Instead, unclaimed funds could be provided to community health and emergency centers that provide care (on a sliding-scale fee) to those who choose not to take advantage of tax deductions and credits, Medicaid, or high-risk state pools.

Additionally, everyone should be permitted to buy health insurance across state lines, especially those who wish to buy a catastrophic-only plan but find that such a product isn't available in their home state. And everyone would be free to choose whether they want to participate in for-profit or nonprofit health insurance, including nonprofit plans offered through cooperatives.

Sound too complicated and too challenging to execute? Consider the alternative.

H.R. 3200 would require nearly every American to buy "acceptable" coverage or pay a tax penalty. It would create a federal healthinsurance exchange to be overseen by a commissioner who decides which insurance companies can sell policies in the exchange. The bill also paves the way for machine-readable health plan ID cards for everyone and establishes a "real-time" data system to determine financial responsibility and eligibility for healthcare.

The so-called public option may be dropped from the final bill. But it's hardly the major concern. The mandate to buy "acceptable coverage" and create a federal insurance czar to control billions of federal dollars in a new health insurance exchange is what's so troubling. Would not a voluntary public option be less destructive to America's health insurance choices? Medicaid has not led to the destruction of private insurance, but the key is that it is voluntary.

We've reached a crossroads in our healthcare system. Do we want to reform our system into a federal trap by forcing nearly everyone to purchase federally "acceptable" health insurance and handing over coverage decisions to a panel of 27 experts? Or do we want to repair and strengthen the safety net for low-income persons, while providing strong tax incentives for encouraging responsible ownership of health insurance and increased cost consciousness?

In a free-market system, individuals, families, communities, states, and the federal government will have some tough decisions ahead regarding how they allocate resources. But maximizing healthcare freedom of choice and privacy rights, while ensuring a compassionate safety net, is the uniquely American way to reform healthcare.

Sue A. Blevins is president of the Institute for Health Freedom.

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