Consumer choice - consideration in implementing health care reforms - National Review Second Opinions: Health-Care Supplement - Cover Story

National Review, Dec 13, 1993 by Don Nickles

IN THE debate over health-care reform, a fundamental question has emerged: Who should drive health care? Should it be government? Or should it be consumers, empowered with more control over health-care choices and costs?

Everyone agrees the current system needs repair. We don't have anything resembling a "free market" in health care, as some claim. With most consumers insulated from the financial considerations of health-care choices, doctors sometimes ordering needless tests to avoid expensive law suits, mountains of paperwork, and a thicket of regulations, there's little incentive or ability to hold down costs.

Meanwhile, many employers have been forced to cut back health-insurance benefits--or stop providing them altogether--because it's just too expensive. That leaves too many Americans without access to affordable health insurance, and millions more in fear of losing what they have. So how do we guarantee access to health insurance--for which you can't be turned down for any reason--and at the same time control costs?

President Clinton's proposal relies on more federal control and regulation of a trillion-dollar industry that represents one-seventh of our economy, and that just happens to provide the highest-quality health care in the world. His plan outlaws 99 per cent of the current health-care plans and substitutes a "one size fits all" program which forces consumers into government-controlled monopolies the President calls "health alliances."

In classic Washington fashion, he overpromises and underfunds. His plan imposes a government-knows-best standard benefits package on every American, denying individuals choices concerning both benefits and costs of health-care plans.

But there is a better way. It's called the Consumer Choice Health Security Act. It achieves the goals of the Clinton plan and other so-called "managed competition" plans with one major difference: The Consumer Choice alternative gives families and individuals, not government bureaucrats, the control over their health insurance. Our plan is modeled on the 33-year-old Federal Employee Health Benefits Program.

The Choice Is Theirs

HERE'S HOW it would work: The tax exclusion for company-sponsored health plans would be replaced with individual tax credits. Companies would take the money they spend to subsidize their employees' health insurance and give it to the employees in the form of wages. Then a tax credit would be given to individuals. The combination of higher wages and the tax credit will provide them the resources to purchase the health insurance they want--the choice is theirs. That's the point.

Everyone, from the self-employed to those who work in large companies, will get that tax credit. People whose medical expenses consume a greater share of their income would receive a larger credit. Because the tax credit is "refundable," the poor and unemployed will get significant assistance to purchase insurance.

Employees who want to keep their employer's insurance would have the option of having their premiums deducted from their paychecks just as they do now. Consumers could also choose to establish a tax-free Medical Savings Account, using the funds they save to pay for additional health benefits or to stockpile for long term health-care needs. Everyone will be required to carry at least "catastrophic" insurance for their protection and to stop cost shifting. No one can be turned down because of a preexisting illness, and all workers will be able to take their insurance with them from one job to another.

The plan goes much further than the Clinton plan to reform medical malpractice laws. The Consumer Choice Health Plan caps punitive-damage awards and limits lawyers' fees. That will save billions of dollars. And like most other credible plans, it takes steps toward cutting red tape and government waste by streamlining health-insurance claims and easing regulatory burdens on providers.

But just as important is what the plan won't do, especially compared to the Clinton government-is-the-answer health plan. Because it contains no onerous mandates that force employers to cough up scarce dollars for health insurance, as the Clinton plan does, it won't cost jobs. It won't add to the total cost of health care, nor add to the federal deficit.

It keeps government's hands off health care, except to police insurance plans to protect consumers. And unlike the Clinton proposal our plan won't ration or reduce the quality of health care through price controls in the form of premium caps or "global budgets."

The Medicaid program--the Federal Government's program to provide health care to the indigent--would be turned into a block grant to the states while freeing them from the burdensome federal mandates that are helping drive Medicaid costs through the roof. In addition, we make available to the states funds from Medicare's "Disproportionate Share" program (an estimated $11 billion) to further help the poor.

This month, several of my colleagues and I will introduce The Consumer Choice Health Plan in Congress. It will protect what's right about the current system-quality, choice of doctors--and knock down the barriers that deny many Americans access to affordable health insurance. Best of all, in the battle between who controls health care--government regulators or consumers--it puts consumers in the drivels seat.