September 28, 1999 | Commentary on Health Care
The idea of giving patients the "right" to sue managed-care companies that refuse to pay for certain medical treatments-at the heart of almost every "patients' rights" bill before Congress-may sound like a promising remedy. But as a solution to the health-insurance crisis, it would be about as effective as leeches.
Sure, the threat of litigation may cause managed-care companies to think twice before rejecting certain services. But more lawsuits also mean larger premiums and higher out-of-pocket costs. Employers will have to charge their workers more for insurance or stop offering it altogether. No wonder House Majority Leader Dick Armey of Texas referred to one bill prescribing lawsuits as "the least worst way to do the wrong thing."
The fact is, lawmakers have made the wrong diagnosis. They need to recognize that "managed care" is the logical outgrowth of a health-care system that makes it all but impossible to buy insurance except through one's employer. Until this link is severed, health-care costs-and the efforts of managed-care companies to control them-will continue to increase.
The problem is that the person using medical services-namely the patient-is shielded from the cost by our "third-party" payment system. From sprained ankles to organ transplants, employers are the ones paying the bills. It was their legitimate desire to tame costs-driven by years of double-digit inflation-that ushered in our age of medical micro-management.
This wouldn't have happened if our tax system didn't discriminate against individuals who would otherwise buy health insurance on their own. Remember: Employer-provided insurance is paid for with pre-tax income. Those who want-or need-to buy a health-insurance plan different than the one offered by their employers not only risk forfeiting this benefit, but must use after-tax income to do so. The additional cost can run to hundreds of dollars a year.
Naturally, most employees opt to stay with their employer's plan, no matter how bad it is. And since they're not the ones footing the bill, they have no incentive to use the system in a cost-effective way.
To illustrate how absurd this is, imagine buying car insurance in this manner. Picture yourself pulling out your insurance card and filling out dozens of forms just to get an oil change, or getting a referral from your "primary mechanic" before taking your car to a transmission specialist. Both insurance and repair costs would climb sharply. Drivers would never tolerate this level of interference. So why handle our health care this way?
The best reform model is called "premium support," in which employers shift from providing insurance to providing money for the purchase of insurance. No longer would employers mandate a "one-size-fits-all" health plan; they would simply give employees a specific amount to be applied toward the purchase of any health plan the employee chooses. If dissatisfied, employees would have the right to change plans. And they could carry coverage from one employer to the next.
"Whatever passes the House will have some form of liability," promises Rep. Tom Coburn, R-Okla., a co-sponsor of one of the current health-care bills. But if workers were able to spend their own money directly on health insurance, they wouldn't need government-mandated grievance procedures or avenues for litigation-the presence of a true market would allow them to select the plan that's right for them, and switch if they don't get what they bargained for. Putting the patient in charge is the healthiest solution for everyone.
Edwin Feulner is president of The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.
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