Our president and his allies in Congress have been advancing their plan to offer government as the answer to insurance reform. They claim a government plan for all is essential to promoting competition among private health insurers, but others point to evidence and experience that shows such subsidized "public options" mainly shift large numbers of individuals previously covered by private insurance to government coverage.
Ultimately, this shift rates a new and massive burden on American taxpayers, forces out private insurance choices, and finally creates government as the dominant insurance provider. Once government is the insurer, it will inevitably mean that government can determine access and availability of medical care itself--as is already the case in other countries where such centralized health care systems already exist.
President Barack Obama and Speaker Nancy Pelosi must not be hearing the American people, who seem to be speaking with clarity and passion at town halls and in the polls. Despite concerns about cost, a great number are specifically opposed to government gaining more control over their health care, including via a public insurance plan. Americans realize that government is not the way other goods and services have become subject to competition. In the U.S., competition has always stemmed from the private sector competing for the dollar of value-seeking consumers. And that private-sector competition has promoted innovation--innovation that has benefited Americans with better and cheaper products and services.
A number of health care proposals--ones that don't require the government takeover that the administration desires--have been put forward, yet our president keeps insisting there are no alternatives. On Monday, in his Labor Day speech to union workers, President Obama repeated his straw man argument and asked those who oppose his reforms, "what are your plans? What are you going to do? And the answer is they don't have one. Their answer is to do nothing!" And on Sept. 3, Speaker of the House Nancy Pelosi repeated her insistence on the public health insurance plan and adamantly declared, "If someone has a better idea for promoting competition and reducing health care costs, they should put it on the table."
Perhaps those interested in insurance reform should first understand why millions of Americans are uninsured in the first place, and to identify who of those cannot afford current health insurance plans. Of the 47 million uninsured, the U.S. Census Bureau notes that almost 10 million are not U.S. citizens, many of whom are illegally in the country. Another 15 million adults do not need significant insurance reform, because they are already fully eligible for Medicaid or Medicare but simply have not signed up, and will be enrolled as soon as they interface with the medical system. And nearly three quarters (74%) of the 8 million uninsured children are already eligible for Medicaid or SCHIP, according to the Urban Institute.
This leaves us with 13.9 million non-elderly adults (only 5% of the population, by the way) without health insurance who do not already qualify for Medicaid or Medicare. Of these, Blue Cross Blue Shield estimated that 8.2 million are without insurance for prolonged periods of time, mainly due to lack of affordability, while 5.7 million adults lack health insurance for short periods because they are either between jobs, are recent college graduates, are part-time seasonal workers or have no perceived need for insurance.
So let's focus on these roughly 14 million Americans who are uninsured, for prolonged periods or otherwise, because they either cannot afford it, or they opt to not purchase it, presumably because they do not view it as good value for their money. Even though 9 million of these live in families with incomes greater than three times poverty level, or over roughly $60,000 per year, it always has been up to American consumers to decide for themselves if something is "affordable" or not. The goal is to reform health insurance markets so that health insurance is made more affordable, so that it may be purchased because individuals themselves determine it is worth spending their money on.
Here are five concrete steps that can increase competition among health insurers without positioning government as the dominant insurer itself:
First, government can strip back the out-of-control mandates on health insurance coverage. State-based mandates alone now number more than 2,100, and are blamed for increasing insurance costs by between 20% and 50%. On what basis does the government force Americans to buy insurance covering services many or most would never want? Do all Americans want health insurance to cover massage therapy, in vitro fertilization, chiropractors, acupuncture and wigs, just to name a few items covered under state mandates? Why not encourage insurers to offer lower cost health plans and simply let patients themselves decide what sort of coverage and benefits they want for their families?
Second, our federal government can eliminate the counterproductive laws that restrict interstate purchasing of private health insurance by individuals and small businesses. A national market for health insurance would immediately create the competition for buyers that President Obama and Speaker Pelosi claim to desire. Existing anti-competitive barriers have resulted in dramatic price variations among states for equivalent health coverage. Since small-business employees make up the biggest proportion of uninsured workers, this one change would have a significant impact on freeing up the market for competition.
Third, government can create competition by lifting the veil of secrecy on the pricing of medical procedures and on the qualifications of doctors and hospitals. No other product or service is already purchased before anyone knows its price. In our current system, patients have no reason to ask--the existing third-party-payer structure makes patients believe that "someone else is paying." Requiring doctors and hospitals to post prices would generate the chance to compete for patients. Furthermore, backroom secret deals with specific insurers would be in full view. Let's leave the experts themselves, medical scientists in their peer-reviewed literature, to determine efficacy and clinical utility. But how about requiring hospitals and clinics to post qualifications of doctors and outcomes of procedures? Information is essential to competition, and consumers should be empowered to allow value-conscious decisions about health care.
Fourth, Health Savings Accounts increase choice for consumers, expand individual ownership and control over health spending, promote price visibility to allow value-based purchasing, and provide incentives for savings to prepare for future health care needs. By expanding the availability and simplifying the rules of lower-cost health plans with HSAs, insurance would become an attractive purchase for the millions of Americans who could afford it, but consider it a poor value in its present form.
Fifth, government can generate competition among insurers by revamping the tax treatment of health care expenses, so that millions of newly empowered Americans become consumers who will shop for their health insurance. Ideas like refundable health care tax credits--actual cash even for those who have no income tax liability--would shift purchasing power and control to a huge number of newly engaged consumers. And as a result, insurers would compete for their dollars, and Americans would ultimately own and control their health plans.
Reforming health insurance should focus on three main goals: 1) reducing the number of uninsured Americans; 2) reducing health insurance cost; and 3) creating portability of insurance during times of unemployment or job change. And government can play a helpful role in correcting current problems with our health system, restrictions that may have evolved out of good intention but have failed. One thing is very clear: Advocates for increasing competition in health care have plenty of other, concrete options besides expanding government control over the system. Americans are beginning to understand these options--even if our elected officials refuse those alternatives and even pretend they don't exist, in the name of big-government ideology.
Scott W. Atlas is a senior fellow at the Hoover Institution and a professor at Stanford University's Medical Center.