Republican health care alternative falls short

by Roger Stark, MD

Health Care Policy Analyst

The Obama Administration has proposed allocating $634 billion toward a national health care plan and Congress is working feverishly to pass legislation into law before this session ends in the fall.

As the underdog, Republicans realize the best defense is a good offense and they recently offered their own proposal, The Patients’ Choice Act, as an alternative to government-run health care. The goals are admirable — “strengthening the relationship between the patient and doctor; using the forces of choice and competition rather than rationing and restrictions to contain costs; and ensuring universal, affordable health care of all Americans.”

What would The Patients’ Choice Act do?

The foundation of the bill is to create affordable health care for every American through a state Health Insurance Exchange, funded through a federal and state partnership. Insurance plans offered through the Exchange would have to meet federal benefit standards, which in one case are defined as the same “health benefits given to Members of Congress.” Participating carriers would be required to issue health insurance to a person regardless of that individual’s age or health history. Premiums would be risk adjusted, but would be set by an “independent board” and every American could be auto-enrolled.

The model for this Exchange is the Massachusetts’ “Connector” plan that has been in place since 2006. Although Massachusetts has succeeded in providing health insurance for an increasing percentage of residents, the cost has been exorbitant and the program is currently bankrupting the state. The governor has asked the federal government for a $1 billion bail-out and the shortfall is expected to grow to at least $4 billion over the next ten years. Lack of access, particularly to primary care, has also been a serious issue for Massachusetts residents. It is difficult to understand why a system that is bankrupt in one state would somehow be financially solvent in the entire country.

The second important feature of The Patients’ Choice Act is a tax rebate for individuals after purchasing their own health insurance. This provision would give workers the same tax break employers now enjoy for providing health benefits to their employees. This idea makes good sense and would go a long way toward giving patients more control over their health care dollars and decisions.

The bill also includes needed and reasonable reform measures for Medicaid and Medicare, two of the largest drains on the federal budget. Low-income Medicaid families would receive direct assistance to purchase private plans that best fit their needs. Medicare would likewise shift to a direct reimbursement model and would allow seniors to choose a private plan in an open market and “force plans to compete against each other”. The bill includes a token means testing provision for high income seniors (>$170,000/year) that would apply to Part B (physician payment) and Part D (drug benefit).

Also included in the bill is language to federally coordinate wellness programs, create incentives (read financial support) for health information technology, allow privatization of the Veterans Administration System, encourage tort reform on the state level, and allow Native Americans to use the private health care system.

Although there is a lot to like in The Patients’ Choice Act, the foundation of the bill is yet more centrally-planned, government-controlled health care. Through the government-run Health Insurance Exchange, benefits and prices would be set by bureaucrats. The goal of allowing every citizen the option of choosing health benefits that are the same as Members of Congress is admirable, but not financially possible.

In a truly free market, insurance companies would be allowed to offer an array of benefit plans (unencumbered by all of the government benefit mandates) and would be free to use a range of prices to attract customers. Patients, creating the market, would determine the winners and losers in the insurance industry, not government planners.

As long as the government sets the benefit and price standards in a centrally-planned fashion, patients will lose their ability to control their health care decisions and dollars. Demand for health care will be greater than supply and health care rationing will be the result.

Dr. Roger Stark is a retired physician and health care policy analyst with Washington Policy Center, a non-partisan independent policy research organization in Seattle and Olympia. For more information contact WPC at 206-937-9691 or online at washingtonpolicy.org.

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