By Grace-Marie Turner
Our health care sector must change to meet the challenges of a 21st century economy.
Consumers, not just in the United States but in all developed countries, are demanding a much greater role in decisions involving their health care. People can find on the Internet a wealth of information about diseases, diagnoses, and treatment options; but all too often, they must fight bureaucracies and paperwork to influence the care they receive.
Moreover, our system of tying health insurance to the workplace is too antiquated for a 21st century workforce that is increasingly independent and mobile. The Labor Department reports that four in ten Americans changed jobs every year. The combination of job mobility and job-based health insurance makes it extremely difficult for people to maintain continuous insurance coverage. People leave their jobs and they lose their health insurance. And with the cost of health insurance and health care rising every year, many fear they would not be able to afford coverage on their own. Even some in the middle class worry that they are one premium payment away from joining the ranks of the uninsured.
Clearly, a more modern system is needed to allow people to have health insurance that is portable … insurance that they can own, control, and tailor to their own needs … insurance that they—not politicians or corporate human resource directors—decide is right for them and their families. Women, especially, believe that they could make better health coverage choices for their families if only they were given the chance.
The move toward more individual control over health care decisions and health care spending is part of the global movement toward health care consumerism. Giving consumers more power and control over their health care and insurance creates new incentives for people to be more proactive in managing their health. Many companies realize this and are instituting new programs that give employees incentives to better manage their health spending. And they are creating new programs for those with chronic illnesses, like diabetes and asthma, to be partners in managing their care. A number of studies have shown that if people are given the tools, the information, and the incentive to manage their care, outcomes can be dramatically improved.
Changing Public Policy Course
America can lead the way in creating a health care system that fits with a 21st century economy by putting into place new policies that allow innovation to continue and better respond to consumer demands and preferences. These policy changes will not be easy. Our health sector is like a giant ship: it takes a great deal of effort to change direction, yet even a small change in course can lead to a very different destination over time.
For the last six years, the health sector has been moving toward more free-market solutions, introducing patient choice and competition into a system that had been largely dominated by top-down, centralized management. A few very familiar examples:
- Consumers Haven’t have new incentives to become partners in managing their health costs through financing options like Health Savings Accounts and company-based Health Reimbursement Arrangements. As a result, both individuals and companies are saving money on health care costs.
- Choice and competition also have been introduced in public programs, like Medicare and Medicaid, showing that people are capable of choosing among competing wholesale nfl jerseys health plans that have new incentives cheap nfl jerseys to offer better benefits at lower costs.
Competition is working, but there are threats on the horizon.
Opposing Health Policy Reform Proposals
National policymakers are currently debating two reforms, each of which would substantially change the course of American health care.
Congressional Proposal. The new leadership in Congress is setting a clear agenda toward expanding government-directed health care programs and cutting back the free-market initiatives begun over the last several years that are bringing more competition and patient choice into private and public programs.
Key committee chairmen want to expand government coverage of children, putting children in families earning up Endings to $83,000 a year and 'children' as old as age 25 into government-run plans.
Others are working to expand Medicaid, a poverty-based program, to include more middle-income Americans, shifting tens of millions of Americans into government-directed health care. And Senator Edward Kennedy (D-Massachusetts) has made his top priority enacting Medicare-for-All legislation that would put all Americans into government-run health care.
President's Proposal. The health care initiative outlined by President George W. Bush in his 2007 State of the Union address sets a clear agenda toward free-market solutions that would enable the U.S. to retain its world leadership in quality health care while addressing the growing problem of the uninsured and middle class anxiety about high health costs.
Under the president's proposal, families' tax dollars would be freed up to buy and own health insurance that is portable from job to job. The White House estimates this plan would give a tax cut to 100 million working Americans and provide health insurance to up to nine million more Americans, without any new long-term costs to the federal treasury.
These dynamic changes in the health insurance marketplace would transform the system and offer health insurance that is more affordable, flexible, and portable.
The centerpiece of this proposal is a Beachbody new standard tax deduction for health insurance, which would be available to any taxpayer who buys qualifying health insurance.
Families would get a new $15,000 standard tax deduction and individuals, $7,500. Taxpayers need not itemize and will get the full deduction, even if the policy they buy costs less, as long as it meets certain minimum requirements for catastrophic coverage. Families earning $50,000 a year could save more than $4,300 in income and payroll taxes and use the tax savings to buy health insurance.
And what about the uninsured, especially those with lower incomes? The White House estimates the proposal would lower the average tax bill of a family without coverage by $3,350. This would mean annuale $3,350 of their pay would be available to buy insurance instead of going to taxes.
But for many of the insured, this still would not be enough.
So there is a second part to the president's plan involving the states. Health and Human Services wholesale mlb jerseys Secretary Mike Leavitt (former governor of Utah) is meeting with every governor to find out what his or her state needs to create "Affordable Choices" in health insurance. His objective is to enable states to make basic, affordable private health insurance policies available to their citizens. This could include, for example, grants in the form of vouchers or refundable tax credits to help low-income people purchase private health insurance.
The Public Policy Debate
The president's proposal was very innovative and took the policy community by surprise with its boldness. The president described his basic philosophy to enthusiastic applause on both sides of the political aisle during his State of the Union Address when he said, "…in all we do, we must remember that the best healthcare decisions are made not by government and insurance companies, but by patients and their doctors."
This changes the whole conversation in the health policy debate. No longer are we simply talking about how much or how little to expand government programs. We can now have a new national debate over how to engage the power of consumers in transforming our health sector to become more efficient, more responsive to individual consumers' needs, and more affordable.
In addressing the core problem of our current dysfunctional tax treatment of health insurance, the president has won support from The Washington Post and The Wall Street Journal, and experts from think tanks as traditionally divergent as the Urban Institute and The Heritage Foundation.
Does everyone like this? No, of course not. Congressional leaders have said the proposal is dead on arrival. It is such a new and creative idea that it will take time for people to analyze and digest the plan and its implications.
- Some suggest it will accelerate the decline of employment-based health insurance by giving a tax break to individuals who buy coverage on their own. But job-based coverage already is declining. This simply gives employers and employees a new negotiating tool to bargain for insurance that offers the best value.
- Others say it doesn't do enough for the uninsured and that tax credits rather than Reports a tax deduction would be better. Using some of the "Affordable Choices" money, however, states can put new resources on the table to provide state-based tax credits, vouchers, or other new subsidies to the uninsured to supplement the federal tax break.
Every American has a state in this debate, since the policy outcome will shape the cost, care, coverage, and control of their health services for decades to come.
Yet the president's free-market plan has many obvious winners:
- The uninsured win because it offers millions more Americans the chance to buy health insurance with the tax savings they will receive from the new standard deduction and likely new state subsidies.
- States win because they will have more flexibility with the new "Affordable Choices" state initiative to direct federal resources to enable needy citizens to get affordable health insurance.
- Employees win because they now have the opportunity to buy health insurance that they can own and take with them from job to job, and it gives them more control over decisions involving their health insurance and health care.
- The health sector wins because this eliminates one of the major hidden forces driving up the cost of health insurance and gives the market new incentives to make insurance more affordable.
- Taxpayers win because 80 percent of them will receive a tax cut when they take the new $7,500 individual or $15,000 family deduction.
This proposal sharpens the debate between those who believe that the answer to health sector problems is increased government involvement and expansion of costly public programs, and those who believe that the free-market—using incentives, competition, and the power of millions of consumers—will transform the health sector and make it more efficient, more responsive to consumer needs, and more affordable.
Americans of all ages have a stake in this public debate, for the policy outcome will shape the cost, care, coverage, and control of their health services for decades to come.
Resources:
State of the Union: Affordable & wholesale jerseys Accessible Health Care," Fact Sheet, White House News and Policies, 01/06
Response from the Think Tanks, Consensus Group, Galen Report, Galen Institute, 2/19/07 (compilation of responses by health policy experts from major public policy research organizations to the president's health reform proposal)
Health Savings Accounts: A Research Guide, Galen Institute, 11/6/06
Health Savings Accounts: A Survey of the Literature, Galen Institute, 1/31/06
About the Author: Grace-Marie Turner is president and Megnyit√°s trustee of the Galen Institute, a not-for-profit health and tax policy research organzation, and founder and facilitator of the Health Policy Consensus Group. She currently serves as a member on the National Advisory Council of Healthcare Research and Quality. This paper was presented in 2007.