October 14, 2003 | Commentary on Health Care
Now the worse news: Some will attempt to use this bad news to further expand the federal government's control of the health-care system. Presidential contender Rep. Richard Gephardt (D-Mo.) already has proposed spending more than $200 billion to provide what he calls "universal coverage."
But that's already happening - gradually, in bits and pieces. Health and Human Services Secretary Tommy Thompson recently bragged that some 2.4 million people are now covered under either Medicaid or the Children's Health Insurance Program. In fact, 25 percent of all U.S. children depend on one of these government programs.
That's good news in the short-term, since children need to see a doctor regularly. But in the longer term, it's a just one more step on the road to "HillaryCare" - the program of government-run, universal health-care that Americans rejected so decisively in the early Clinton years.
The problem, as the Clinton plan foretold, is that eventually bureaucrats will decide which medical procedures are covered and which aren't, with patients forced to see a government-approved doctor instead of choosing their own, and health-care services rationed (again, by bureaucrats) to hold down costs.
But there is something we can do to increase the number of people with coverage, while we also increase their free choice. The answer is a health-care tax credit.
Let's face it: Our current health-insurance system is broken, because the person using insurance is almost never in control of it. About two-thirds of insured Americans get their coverage through their employer. Most of the rest are in a government program such as Medicare or Medicaid.
These people are completely at the mercy of others. If their employer decides to drop coverage, or if the government changes its Medicaid policy, they can be left with no coverage. But a federal health-care tax credit would change that.
It would work like this: The federal government would give every taxpayer a refundable, advanceable credit that could be used only to buy health insurance. Such a tax benefit is really only fair, since the government already gives tax benefits to those buying coverage through their employer. This just puts the individual, not the employer, in charge.
This isn't government-run medicine. It would be a way for the government to encourage people to enter the private health-insurance market, where they would enjoy a growing number of choices.
The consumer-based approach offers people seamless health-care coverage. They wouldn't have to change plans - and, often, doctors - every time they change jobs. Under this system, health insurance would work the way car insurance, life insurance and homeowners insurance already do. Consumers could choose what coverage they need or don't need, and pay just for that.
Opponents will claim tax credits wouldn't work, because the private insurance market isn't large enough. That may be true now, but imagine how quickly companies would act to create a market if millions of Americans were suddenly seeking private coverage. Before long, Americans with tax credits would enjoy dozens of choices.
Individual states need to do their part, too. Each state regulates its own insurance market. In a noble attempt to make sure that everyone with coverage gets good coverage at a good price, many states mandate so many benefits and regulate their prices that most companies can't afford to offer insurance. That limits choice, and keeps many people from finding affordable policies. States must be willing to repeal some of their regulations and mandates, to allow the free market to work.
If there were suddenly millions of young Americans eager to spend their tax credit on health insurance, insurers would tailor plans specifically for them. The market would be created to meet the demand, prices would come down, and these Americans would leave the ranks of the uninsured.
So far, the only government-based answer to this problem is to expand program such as Medicaid. But cash-strapped states can't afford that. They're already finding ways to trim Medicaid benefits. Besides, studies show that when Medicaid expands, private insurance coverage declines. We need to encourage people to take control of their own insurance, not find ways to make more of them dependent on already failing government programs.
Large problems often require creative solutions. For a growing number of Americans, the lack of health insurance is indeed a crisis. But expanding government-controlled medicine isn't the answer.
Enable the free market to work by providing a tax credit, and in years to come, millions of Americans will move from uninsured to insured. That will be good news for everyone.
Nina Owcharenko is a senior policy analyst in the Center for Health Policy Studies at The Heritage Foundation.
Reprinted with permission of The New York Post